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Liberty 




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tohitv Beverley Robinson 




Economics of Liberty 

by 

John Beverley Robinson 



Herman Kuehn 

31 Prince Street 

Minneapolis 

1916 



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*rhis book is intended to be a brief 
and clear statement of ^he system of 
social organization first enunciated by 
the illustrious Proudhon a century ago. 

His works, although of unparalleled 
brilliance, are so voluminous that it is 
often difficult to extract his meaning 
from the mass of controversy that 
envelopes the fundamental thoughts. 

If any are persuaded by these pages 
of the efficacy of liberty to accomplish 
social order, justice and prosperity, it 
w^ill sufficiently gratify 

The Author. 



Contents 

Society 7 

Definitions 19 

The Economic Organism 23 

Free Exchange 33 

Value 40 

Equality 52 

Privilege 57 

Land Ownership 67 

The Money Privilege 75 

Taxation 88 

Special Privileges 93 

Liberty 98 

Appendix 1 108 

Appendix II 113 



SOCIETY 

T^HAT is Society? 

Everybody nowadays is talking or writ- 
ing about Society — society in the abstract — 
general human society. Social service, the social 
uplift — all the phrases, half discredited in ad- 
vance by the fluency with which they drop 
from our lips — ^what do these really mean? 

Wise professors of sociology treat of "the 
housing of the poor," "the problem of the un- 
employed," devise futile formulas, and pile up 
mountains of barren statistics, while no one in 
recent times has uttered even an outline of a 
theory as to the essential constitution of that 
Society of which Sociology, by its very name, 
proclaims itself the science. 

We habitually regard the headless, formless 
chaos of absurdities in human relations, in the 
midst of which we live, as Society, but we are 
without an intellectual norm to guide us: we 
have evolved as yet no concept with which to 
rationalize the observed facts. 

Or, if such a norm has been proclaimed in 
the past, it has not been shouted in the ears 
of the people so that they must hear it. It has 
fallen out of sight and hearing, and must be 
reproclaimed in words intelligible and unmis- 
takable, until it gains acceptance. 

For, without such a norm, all our painstak- 
ing researches into facts are fruitless ; as were 
the researches of alchemy before chemistry 

(7) 



8 ECONOMICS OF LIBERTY 

with its scales and atomic theories rationalized 
it. Some generalized conception, at the least 
some working hypothesis, is essential, before 
the dry statistics, that we so laboriously 
gather, can have any meaning or lead to any 
conclusion. 

Let us try to clarify our thoughts, and to 
build up some clear, crystalline conception. 

In the first place, what do we mean by a 
society in the little? Societies abound today 
— societies for the propagation of this and the 
prohibition of that — all sorts of societies, and 
for all sorts of purposes. What then is a 
society? 

A society is evidently a combination of two 
or more persons in order to unite their efforts 
toward achieving a common end: evidently 
also such a combination must be entirely 
voluntary on the part of those who combine. 

It is possible to secure combined effort with- 
out the assent of them whose efforts are com- 
bined. When a white man, armed with a re- 
peating rifle, compels a band of unarmed sav- 
ages to obtain ivory for him, he combines their 
efforts indeed, but we call such a combination 
slavery, not association. 

For every association it is essential that the 
efforts of the associated should be exerted 
voluntarily; and such a voluntary association 
it is that constitutes a society. 

If two men ask a third to show them the 
way, and he willingly accompanies them, they 
are associated: if, being two to one, they 



SOCIETY 9 

use their superior force to drag him along, as- 
sociation ceases, and we have tyranny or 
authority on the part of the two, and subjuga- 
tion or slavery on the part of the recalcitrant. 
For any society to deserve the name, two 
conditions must prevail: 

1. A common end to be achieved or a com- 
mon desire to be gratified. 

2. Voluntary union of effort on the part of 
the associated. 

So that Society in general of the people of 
a city, or of a country, or of the world, in 
order to be properly called a society, must dis- 
play these two characteristics. If we find that 
it does not comply with these conditions, we 
must call it by some other name than Society. 

If we find that it recognizes these condi- 
tions in part, but not completely, we can only 
say that it is an incomplete or undeveloped 
society. Such undeveloped societies are the 
various forms of combination that we find 
throughout the world today under the name of 
governments. 

A voluntary agreement is called a contract. 
It is essential to the validity of a contract that 
it should be voluntary, that it should express 
the true desires of the parties at the time of 
making the contract, and that neither party 
should have been under restraint or compul- 
sion — that there should have been what the 
lawyers call "a meeting of the minds" of the 
parties. 



10 ECONOMICS OF LIBERTY 

So much so, that a contract is at once abro- 
gated, if it can be shown that such meeting of 
minds did not really occur. 

In almost all private relations these volun- 
tary agreements or contracts are recognized 
by modern governments. The whole struc- 
ture of modern commerce is built upon them; 
and through them the various doings of our 
daily lives are conducted. Yet in very many 
private relations and in all public relations 
voluntary contracts are not admitted, and we 
are compelled to act as an emperor or king or 
congress dictates. Just as far as we are com- 
pelled to yield to authority, just so far we are 
incompletely associated. 

In the past,^he province of authority has 
been far wider than it is today, and the realm 
of contract correspondingly narrowed. The 
time was when almost all the acts of the in- 
dividual were regulated by his status in the 
community without regard to his wishes. The 
farther back we go in history, the more com- 
plete domination by authority do we find. The 
Egyptian of ancient times, whether peasant or 
noble, was the absolute property of the mon- 
arch, his duties and responsibilities defined by 
his status, and little or not at all by contract. 
The classical republics, while granting some 
liberty to the citizen, were based on slavery. 
The serf of the Middle Ages was a part of 
the plant: he belonged to his farm, as much 
as the barns and ploughs and horses, and was 
bought and sold with it. 



SOCIETY 11 

The absolutism of kings prevailed down to 
the American Revolution, and still prevails in 
Russia and Germany. Constitutional govern- 
ment has triumphed in the rest of Europe, in 
the United States and in most of the countries 
of South America only within a little more 
than a century. 

But even constitutional government is still 
the rule of authority, as clearly as the rule of 
an autocrat, although not to so great a degree. 
In a republic, and still more in a democracy, 
at least a majority of the people is supposed 
to acquiesce in the measures of the govern- 
ment; while an autocrat may issue orders 
against the desires of everybody else: he is 
held in check only by fear of provoking a 
revolt. 

But while the majority in a democracy may 
voluntarily unite their action, the minority 
does not join with them voluntarily; it is vir- 
tually compelled to acquiesce, however much 
against its wishes. Such association as we 
have, even at its highest, is still the rule of 
force or authority, as it has been since the 
earliest ages. 

By the definition then of Society that we at 
first laid down, that a perfect society must be 
a voluntary agreement on the part of all the 
associated, a completely social condition has 
not yet been attained : we are still only partly 
socialized. 

It is not sufficient that we secure "the 
greatest good of the greatest number." No 



12 ECONOMICS OF LIBERTY 

matter how great a number of people may 
agree to unite for a common end; no matter 
how small a number may dissent; if the 
minority is coerced by the majority into ac- 
quiescence, the condition is not social but anti- 
social. It is only when each individual is free 
to withhold acquiescence, that a completely 
social condition is attained. 

Society, in its full meaning, has not yet 
been reached. We are but approaching the 
time when it will be established. Almost all 
the theories and generalizations that have been 
laboriously worked out by the economists in 
relation to our present incomplete society, 
have no application to a perfect form of asso- 
ciation. 

As for the common end in view, it has al- 
ways been, in the authoritative societies of the 
past and present, in one word — war. Man, 
although a gregarious animal, and amicable 
toward the members of his immediate clan, is 
a predatory animal toward other clans, doing 
his fighting in packs, and the military societies 
of the past were organized quite as much for 
conquest as for defense. Up to the sixteenth 
century, conquest was regarded as the proper 
occupation of princes, as noted by the astute 
Machiavelli. Whether conquering or con- 
quered, men enjoyed, and still enjoy, the ex- 
citement of fighting. 

But a time came when war ceased to be the 
chief occupation of life. Commerce and in- 



SOCIETY 13 

dustry grew. A taste for the good things of 
life developed. Tyranny may be the only 
practicable form of organization for war, but 
commerce and industry require peace and free- 
dom. So it has gone on down to our day: 
commerce and industry daily increasing, until 
they have become the leading activity of life; 
war pushed into the background, as an occa- 
sional diversion only instead of a continual joy 
as it used to be. 

Reluctantly, indeed, do we abjure fighting. 
Not until we are forced to do so, can we bring 
ourselves to renounce the delight in battle. 
We still glow with the warmth of loyalty to 
the flag. Yet we are not ready to give up all 
the comforts of civilization for the sake of war. 
It must be one or the other, either peaceful in- 
dustry and comfort, or war and deprivation. 

Nothing more strikingly indicates our prog- 
ress toward industrialism than the opposition 
to war that has grown up within a generation. 
Not only among the working classes, but by 
the ruling class is war denounced. Hundreds 
of thousands of working men are banded to- 
gether against war, and peace societies every- 
where are springing up. The establishment of 
the Hague tribunal is a sign of the trend of 
the times. 



Most of our social ills today are caused by the 
failure of the social organization to keep pace 
with the rapid development of industry. 



14 ECONOMICS OF LIBERTY 

Industry and Commerce, Siamese twins, so 
closely united that they cannot be separated, 
are today the supreme interest of the world ; yet 
they are continually held back by a form of 
social organization suited to a quite different 
condition, that is to the condition of universal 
war that formerly prevailed. Not until we 
have entirely done away with the present form 
of social organization, abolished the remnants 
of authority that still survive, and substituted 
the reign of liberty, that is to say, of free con- 
tract, can industrialism grow to its full stature. 
War requires authority ; trade requires liberty. 

And it is for this reason, too, that all the 
projects for social amelioration that are based 
upon authority are predestined to failure ; from 
the mild land taxation scheme of Henry George 
to the complete military organization of in- 
dustry contemplated by the thoroughly author- 
itarian wing of Socialism. They are trying to 
carve the features of the future with a bayonet 
instead of a chisel ! 

Industry needs not authority but freedom of 
contract, in its widest and most far-reaching 
sense; and liberty can come, not through 
authority, but through the denial of authority. 
Many now are strongly attracted by the Social- 
istic theories of the day ; they are repelled only 
by the cast iron regulations that seem to be 
involved. We are about to demonstrate a 
Socialism based upon a wider liberty than has 
ever yet prevailed. 



SOCIETY 15 

But some will say: Liberty? What do you 
mean? Have we not liberty already? Are we 
not all free to vote for any man we may choose? 
If we want any particular liberty, can we not 
vote for a man who is pledged to give it to us? 
What more of liberty can you ask? 

To which the answer is double : the practical 
and theoretical. 

The practical answer is: Look about you 
and see for yourself whither this boasted free 
democracy has brought us. Look at the mining 
camps of Michigan, of West Virginia and Col- 
orado. Read the stories told in the newspapers 
every day of the shooting of the miners by the 
soldiers. Not the miners drawn up in array, 
"in sunlit battle's light," but the huts and 
tents where they live, with their wives and 
babies in them, raked by machine guns. Look 
at our hell prisons, with half a million men 
shut up in them! Oh, yes, quite legally, of 
course ! 

Or, to take less harrying sights, look at trade, 
the world over, continually in a state of de- 
pression. Industry, struggling to free itself 
from the unseen bands that bind it, and to 
produce more and more, is held down and 
throttled by some invisible monster. Men, 
whose most earnest desire is to work, are un- 
able to find an opportunity. And not only the 
crowd of unfortunates who are thrown on the 
street, who are called tramps by the more 
fortunate, and who according to the popular 
delusion, will not work, but the vaster crowd 



16 ECONOMICS OF LIBERTY 

of men who are still able to maintain a footing 
against the current, who are gradually forced 
to take lower wages, who are often out of work 
for months at a time, who can barely keep 
their heads above the water. 

Look at our cities, each owned by a handful 
of rich men, and nominally governed by a 
horde of politicians, selected from the worst, 
and responsible only to the rich clique that 
controls their leaders. Look at it; and say 
whether this democracy that we have set up is 
really so admirable an arrangement as we per- 
suade ourselves to think it is. 

The theoretical answer is this: Democracy, 
in principle is based upon authority quite as 
much as monarchy; and a free social organ- 
ization is incompatible with either monarchy 
of democracy. 

Consider for a moment. Every society or 
association must have funds for carrying on its 
work. Every association except government 
obtains these funds by voluntary contributions 
from its members. Upon ceasing to pay dues, 
membership terminates. No society can force 
anybody to pay his contributions. 

But with governments it is different. They 
live, not by voluntary contributions, but on 
forced contributions called taxes. Each gov- 
ernment asserts dominion over a certain terri- 
tory, and compels the payment of contribu- 
tions by all who live upon that territory. That 
is why government of any description does not 
deserve the name of a society. Membership 



SOCIETY 17 

in a society is voluntary: membership in a 
government is compulsory. That is the radical 
distinction. 

In order to become a social organization, 
government must become commercialized; 
that is, it must cease to be government. It 
must sell its services to those who choose to 
pay for them, and not try to force them upon 
those who do not want them. And that is 
what the fully developed social organization 
will be — voluntary and not compulsory — 
society and not government. 

Some will regard such a proposition as too 
visionary to merit consideration. It is quite 
natural that they should so regard it at first 
glance. It was thus that flying machines were 
regarded before they became an accomplished 
fact. It was thus that the telegraph and the 
steamship and the locomotive were regarded, 
as the dreams of visionaries. 

Yet invention after invention has become 
realized, until now the attitude of incredulity 
has changed, and it is hard to suggest any ex- 
travagance in the physical realm that is not 
calmly accepted as a possibility. We have gone 
on inventing physical improvements, until our 
industrial development has far outstripped our 
social institutions. It is time for us to devote 
some inventive thought to the social organiza- 
tion, to make it fit in with the industrial ex- 
pansion, and to that end, no theory should be 
rashly rejected. 



18 ECONOMICS OF LIBERTY 

We are compelled to postulate such a vol- 
untary society as we have outlined, because 
the relations of men under a spontaneous or 
voluntary form of association can be definitely 
formulated; while under an arbitrary form of 
organization — and authority is essentially ar- 
bitrary — their relations cannot be formulated. 

Postulating, then, such a society, and assum- 
ing that the society of the future must be 
industrial and not military, we are about to 
investigate the industrial relations that will 
necessarily follow— the economics of a state 
of freedom. 



DEFINITIONS 

1. Economics is the science that formulates 
the commercial relations of men. 

npHE early treatises prefixed the epithet 
"poHtical," and spoke of economics as polit- 
ical economy. The reason for this was that 
their main object was to elucidate the commer- 
cial relations among nations under existing 
conditions, rather than among the individuals 
that compose a community, as well as among 
communities, under rational conditions. And 
ever since, economists have been content to 
explain things as they are, making no attempt 
to suggest any improvement. Their inventive 
faculty has become atrophied: they investigate 
minute details of what they are pleased to call 
practical problems; never concerning them- 
selves with general theories at all. 

In the sense in which we shall use it, the 
term economics is applicable to the simplest 
commercial transactions among individuals, 
as well as to those that take place among 
nations; indeed, very much more to those 
among individuals, because pure economics 
takes no note of the boundaries that separate 
nations, and because, after all, the transactions 
among nations are but the sum of a multitude 
of transactions among individuals. 

2. Commerce is the exchange of services 
among human beings. 

(19) 



20 ECONOMICS OF LIBERTY 

In the usual sense, commerce applies rather 
to the transfer of the material results of human 
labor. We now extend it, so that the terms 
may include the direct exchange of services for 
services, as when a lawyer draws up a deed 
to pay the doctor's bill; or of material prod- 
ucts for services, as when the farmer offers 
the minister a barrel of apples as a marriage 
fee. 

Other things than services or the products 
of labor may be exchanged. Permission to 
labor on a certain piece of land may be granted, 
in return for a portion of the product ; but such 
permission, not being a product of labor, the 
transaction is not a commercial exchange. 

So again, at various times, sovereigns have 
granted certain privileges as monopolies to 
favorites, or to those who would pay for them, 
just as at present patent privileges are con- 
ferred; but neither the royal patent, nor that 
of a democratic government is a labor prod- 
uct, and consequently neither is in the realm 
of commerce. 

3. Product denotes the result of labor. 
Whether material or immaterial — ^the advice 

that is produced by the doctor as well as the 
potatoes that are produced by the farmer, the 
music or picture which are the singer's or 
painter's products, as well as the fish or coal 
which are the products of the fisherman or 
miner— all are included in the term "product." 

4. Commodities are material products. 



DEFINITIONS 21 

Thus, the potatoes, fish and coal are com- 
modities: the doctor's advice and the singer's 
song, while equally products, are not com- 
modities. 

5. Labor comprises all human activities 
that result in an exchangeable product. 

The functions of the pirate, of the soldier, of 
the government functionary, from bookkeeper 
to cabinet minister, are not labor, economically 
speaking, however laborious, in common dis- 
course, may be their occupation. That it may 
be discussed by economics, the product of 
labor must be exchangeable. 

We may therefore revise our first definition 
of economics, and say, in more technical 
phrase : 

6. Economics is the science that formu- 
lates the exchange of labor products. 

The three terms, labor, exchange and prod- 
uct are inseparably connected. That only is 
labor which results in an exchangeable prod- 
uct. That only is a product which is the re- 
sult of labor and which is exchangeable. That 
only is exchange which contemplates a trans- 
fer of the products of labor. 

However laboriously this book may be 
written, it is not an economic quantity if no 
publisher will publish it. The unpaid in- 
vestigations of the devotee of science, the 
hardships of the polar explorer, invaluable as 
their achievements may be, are not labor in 
the economic sense. So, too, with the large 



22 ECONOMICS OF LIBERTY 

amount of work that is done gratis by societies 
and committees, with no material return. A 
man may be occupied every waking minute, 
and wear out his life with hard work, yet 
never perform a single act of economic labor, 
nor ever put forth an exchangeable product. 



THE ECONOMIC ORGANISM 

CO great is the complexity o£ modern indus- 
try, so innumerable are the branches into 
which it subdivides, so minute the subdivi- 
sions and so involved their connections, that 
it seems almost hopeless to reduce the whole 
to anything approaching order. Nevertheless 
some partial and imperfect classification may 
be made. 

All industry may be arranged under three 
or four general heads. First, what has been 
called extraction, that is to say, gathering the 
original supplies of nature, as is done by the 
miner, the fisherman, the hunter. 

Next to these are the arts of cultivation, 
whereby the natural product of plants and 
animals is much increased; which easily di- 
vides itself into two branches, the one devoted 
to the cultivation of animal, the other of vege- 
table products — grazing and farming. 

After these comes the division of manufac- 
ture, which deals with materials obtained from 
the natural state by the extractors or by the 
cultivators, and classifiable in three grand divi- 
sions : clothing, the first need of humanity after 
food; shelter, which succeeds clothing; and 
tools, which accompany every art at all stages, 
and might almost rank as the first need of 
humanity. To these we may add transporta- 
tion. 

(23) 



24 ECONOMICS OF LIBERTY 

Finally, there is the class that embraces 
those whose personal services are all that is 
given; no material product in any form being 
the result of their activities. This class com- 
prises doctors, teachers, actors, ministers, 
business managers and the like. 

Each of these classes is susceptible of subdi- 
vision into minor groups, and these again into 
the various individual occupations of which 
they are composed. It is possible therefore to 
arrange the industrial divisions in tabular 
form after the manner of a genealogical chart, 
and an attempt at such a partial tabulation is 
shown on the opposite page. 

Industry is thus seen to include the simplest 
activities, as well as the most complex; the 
sole condition being that the product shall be 
desired by others for their gratification and 
therefore be exchangeable. 

The word product is applied alike to all the 
varied results of industry. A pail of water is 
the product of him who carries it from the 
spring, or pumps it from a well. A hatful of 
berries is the product of him who gathers 
them, if found growing wild, or of him who 
plants, prunes and waters them, if they are the 
results of cultivation. A calf is the product 
of him who has captured it in a wild state, or 
of him who has housed and fed the mother 
cow. 

They who suppose that the increase of the 
cultivated field or flock is a natural increase, 
rewarding the owner beyond the amount of 



THE ECONOMIC ORGANISM 25 

Tabulated Classification of Industrial Occupations 



Extractors 



Cultivators 



° i 



Manufacturers 



Hunters 



Vegetable 
gatherers 



Mineral 
gatherers 



f Graziers 



Farmers 



Tool maker; 



Builders 



Clothiers 



Carriers 



Animal hunters 
Fur hunters 
Feather hunters 
Fishermen 



I Lumber 
) Turpentine 
') India rubber 
( Truffles 



Miners 
Quarrymen 
Well diggers 



Cattle 
Sheep 
Horses 
Ostriches 



Food supply 
Foresters 
Silk growers 



Machinery 



Masons 

Carpenters 

Plumbers 



Weavers 

Tailors 

Milliners 



{ 



Pearl divers 
Whalers 



Coal 
Oil 



( Pi 



Precious stones 



Grain 

Vegetables 

Fruit 



Professional 



Business men 

Teachers 

Entertainers 

Doctors 



Managers 

Clerks 

Salesmen 



i Actors 
Ministers 
Singers 
Jugglers 



Surgeons 

Dentists 

Veterinarians 



26 ECONOMICS OF LIBERTY 

labor involved in the care of either, will find 
that the facts indicate the contrary; namely, 
that the price of the increase is in proportion 
to its average cost in labor, and exceeds it only 
by the minimum that constitutes the wages 
of the seller, approximating that of the aver- 
age daily wages in other occupations. 

Thus, again, a fish is the product of him 
who has hooked it. If it is carried ashore and 
sold by another person, it is the product of 
the fisherman and the marketman jointly. If 
it is turned over by the latter to a third, to 
be preserved on ice for an occasion when it 
may be sold, it becomes the joint product of 
all three, transportation and preservation be- 
ing as truly acts of production as the hooking 
itself of the fish. 

And the fish is the product not only of 
these, but of the man who has cut the ice dur- 
ing the winter previous, and of him who has 
stored it in the interval, and of the boatbuilder 
that furnished the fisherman with his boat, 
and the lumberman that cut the timbers for 
it, and the man that made the nails to fasten 
the timbers together, and the miners that dug 
the iron and coal wherewith the nails were 
fashioned, in an endless network of ramifica- 
tions. 

The sole condition of human activities that 
is necessary to reckon them as labor in the 
economic sense, is that their product shall be 
exchangeable. By this test the services of the 
devoted physician are labor, as truly as those 



THE ECONOMIC ORGANISM 27 

of a blacksmith or coal trimmer; because 
others will give him of their products in 
return. 

In a state of society in which each man must 
do all the various kinds of work necessary for 
his existence, without exchanging his services 
for those of others, economic conditions do not 
exist. Such a state perhaps never prevails in 
completeness at this day: approximations to 
it are found among primitive tribes and in 
primitive communities. 

In my youth I have often conversed with a 
farmer, at that time an old man of eighty years 
or more, who delighted in telling of the mode 
of life in his youth, on an isolated farm, which 
was the same for all other farms of that day. 

Everything used by the family was pro- 
duced by its members — ^food, clothing, build- 
ings, even tools of forged iron. Wool and flax 
were grown, spun, woven, cut and sewed into 
garments, and leather was tanned from the 
hides of slaughtered cattle. The only outside 
worker was the cobbler, who visited each farm 
on his annual rounds, making shoes for the 
family, from leather furnished from their own 
stock, to last for the ensuing year. 

In such a society, there is but the germ of 
an economic organization. It is only when 
tasks are divided, and exchange of services is 
general, that the organization of an economic 
society begins. 

We have spoken of the complexity of sub- 
division that soon follows the earliest organi- 



28 ECONOMICS OF LIBERTY 

zation of labor — a complexity so involved in 
a fully developed economic society that it 
seems at first glance impossible to unravel or 
explain, like a huge machine, with its innumer- 
able wheels and belts and cams, all moving in 
opposite directions and at various rates of 
speed, and each of which must fulfil its func- 
tions smoothly, from the great fly-wheel to 
the tiniest spring. 

In order to reach any clearness of concep- 
tion, it becomes necessary in economic 
demonstrations to suppose hypothetical so- 
cieties, consisting of a limited number of in- 
dividuals, sometimes as small as two or three, 
and never beyond the easy grasp of the mind, 
among whom certain relations may be shown 
to be inevitable. Such hypothetical groups 
correspond to the diagrams used in geometry, 
or to the symbolism of algebra, presenting 
fundamental facts in such brief and compact 
form that their relations can be determined by 
mere inspection. 

The validity of such a method of demon- 
stration is based upon the definition of com- 
merce that we have laid down, as the exchange 
of services among men. The principles that 
govern a transaction between two individuals, 
or among a hundred, are the same that rule 
when a thousand or a hundred thousand are 
involved. 

Some such device is indeed essential, if we 
are to reach any conclusions at all, in the face 
of the rush and roar of modern commerce; as 



THE ECONOMIC ORGANISM 29 

the geometricians diagram of the curve of 
wave motion clears up problems of hydraulics 
that could never be solved by merely watching 
the dash and swirl of the tumbling breakers. 
We are now in a position to approach the 
series of formulas that together constitute 
economic science. 



Proposition I, 

All production leaves a surplus. 

Conceive the primitive producer laboring 
alone. At first almost his whole time is oc- 
cupied in searching for roots and berries and 
in the hunt. He must soon find leisure in 
which to build his hut: the hut, being in ex- 
cess of the bare living which he had gained be- 
fore, is a surplus, which remains in the posses- 
sion of the producer, not only augmenting his 
comfort, but increasing his power of further 
production. 

Then each day sees an additional increase 
in his possessions : Clothing is made, a horse 
is captured, a corral is built. With a mount, 
the chase becomes easy, and surplus time is 
left for the first planting of seed. Soon the 
crop gives an assurance in advance of a living 
for a season, and there is still more time left 
for the production of a further surplus. 

The continually increasing surplus, each day 
larger than on the preceding, because it is the 
purpose and the result of each surplus to 
facilitate further production, this growing sur- 



30 ECONOMICS OF LIBERTY 

plus grows with still greater rapidity with the 
beginning of associated effort. 

Division of labor, by which each one does 
that which he can do best; commerce, by 
which he exchanges his product for those of 
others; tools and machinery, by which the 
product is increased a hundred or a thousand 
fold, with no increase in labor ; all these unite to 
make the product of the civilized man incred- 
ibly greater than that of his primitive brother. 

It is not easy to realize this, on account of 
disturbing factors that affect the results. At 
first glance, the modern laborer appears to be 
but little better off than his savage prede- 
cessor. A dark room in a tenement is not so 
much to be preferred to a tent in the open; 
nor is the fare of the modern worker very 
much better than that of the more advanced 
barbarous tribes — let us say of the Pueblo 
Indians. 

The reason is that by legal methods which 
we have consecrated, the surplus does not be- 
long to him who produces it; but is diverted 
from his possession, and put into the hands of 
others. 

From this point of view, the fact that an 
enormous and ever-increasing surplus is pro- 
duced needs no demonstration. The vast 
stores of wealth which we see before our eyes 
accumulating daily, at an ever-increasing rate, 
in the hands of a few, are the surplus product 
of labor, which would bring abundance and 
ease to all, if it were not snatched from them 



THE ECONOMIC ORGANISM 31 

by means so obscure that it needs all our at- 
tention to explore them. 



Proposition II, 

Capital is the surplus of production. 

The economists have always staggered 
when they attempted to define Capital, be- 
cause they failed to reduce the conception to 
its elements, and tried to make a definition 
which should include the artificial disturbing 
forces which distort capital from its natural 
forms. 

Accordingly they have tried to divide prod- 
ucts into those which were consumed and 
those which were used for further production, 
into fixed capital and floating capital, and so 
on. 

No such distinction is necessary. 

The food that a man eats, the house in 
which he lives, the carpet on his floor, the 
clothes on his back, are as certainly used in 
furthering production, although indirectly, as 
are his tools, his machinery, his factory or the 
coal in his boiler-room. 

The exertion of the higher faculties de- 
pends, to a very large extent, upon surround- 
ings of comfort, even of luxury. An astron- 
omer, or a musician, or a painter, or an in- 
ventor, could accomplish little if he were 
housed in a fireless tent; for, besides the dis- 
comfort that numbs the faculties, there is no 



32 ECONOMICS OF LIBERTY 

place for permanent accumulation, no furni- 
ture wherein to keep books or instruments, no 
objects of art wherewith to stimulate the 
mind. 

Thus, our domestic and personal posses- 
sions, and even the food that we eat, are as 
clearly essential for further production, al- 
though indirectly, as are the various appli- 
ances which are directly used. 



FREE EXCHANGE 

"DY free exchange is meant such exchange of 
services as will occur among men each of 
whom is guided in his actions solely by his 
own judgment of his own interest, subject only 
to the material limitations of the world in 
which he lives, but not restrained by the will 
of other men. 

This seems a roundabout way of saying a 
simple thing; but it is really the whole ques- 
tion of freedom that is involved, not only 
in exchange, but in all relations ; and the state- 
ment is meant to cover the carping of them 
who are wont to say, "None of us is free; we 
are all limited by circumstances; we are all 
slaves to our passions . . . and so on" when- 
ever any question of free or not free is raised. 

It is not deprivation from lack of ability or 
opportunity that is intended. 

When the rising tide threatens to surround 
us, we do not complain that we are deprived 
of liberty because we are compelled to run, 
to escape being cut off and drowned. Nor do 
we say that we are enslaved if we find that 
it is impossible to raise bananas in a northern 
climate, because the season is not long enough 
to ripen them. 

On the contrary, it is precisely the freedom 
to adapt our actions to circumstances that we 
call freedom; and it is only when we are re- 
strained from doing so by the will of another 

(33) 



34 ECONOMICS OF LIBERTY 

human being like ourselves that we call it 
slavery. 

Such a state of freedom has never existed 
in the past, and does not nov^ exist ; yet toward 
it, through all the centuries, the world has been 
moving, and is now, perhaps, in sight of the 
goal. We still labor, subject to the will of 
him who permits us to labor, but does nothing 
himself — the landlord. We still exchange, 
subject to the will of him who permits us to 
exchange^ — the banker; but we have escaped 
from the conditions of chattel slavery and of 
feudal serfdom of the past. Postulating such 
a condition of freedom, the mode in which ex- 
changes must occur is self-evident. 

In the relation of master and slave, it is im- 
possible to predict what exchange of services 
will take place. The slave is forced to give as 
much service as the master chooses to exact; 
while the master, in return, gives as little as 
it may please him — a hickory shirt and 
trousers a year, with corn meal, pork and 
molasses for food, or as much more liberally 
as he may prefer. The exchange, however, can- 
not be predicted ; it is entirely arbitrary — a 
matter of the proprietor's choice. 

So again, if two men were exchanging peas 
for potatoes, the transaction would be carried 
out on terms that each esteemed fair, if both 
were free; but if a third party stood by, em- 
powered to take all that he could seize, by force 
or fraud, of both peas and potatoes, the trans- 



FREE EXCHANGE 35 

action would terminate differently, and in a 
way that could not be predicted. 



Proposition III, 

In a state of freedom, products are ex- 
changed for equal products. 

For, in the absence of compelling causes, no 
man would accept less of the product of an- 
other in exchange for a certain amount of his 
own product than could be produced by him- 
self with an equal amount of exertion. 

"Give me two bushels of your carrots, and 
I will give you two bushels of my potatoes,'* 
says a farmer. "That will not do at all," re- 
plies his neighbor, "if I had planted potatoes, 
I could have raised three bushels of them as 
easily as two of my carrots. I will trade only 
on those terms — two of my carrots for three 
of your potatoes." 

"Come and help me catch some fish; you 
shall row the boat, and I will hold the line, and 
of every four fish that we catch, you shall have 
one." "Why only one?" replies his friend; 
"why not equal shares?" "Because I am so 
much more skilful than you that I deserve the 
larger share." "Granted that you are the most 
skilful with line and hook; but what would 
your skill avail you without some one to row? 
You could not catch any fish at all from the 
dock." "I know that I could not," replies the 
first, "but any one can row, while it takes a 



36 ECONOMICS OF LIBERTY 

clever man to fish." "No, I will row only for 
an equal share of fish." And, as an oarsman 
is necessary for a fisherman who would fish 
from a boat, the equal agreement is made.* 

It is only by reducing transactions to these 
simplest conditions that the essential equality 
of services becomes manifest. In both these 
examples the conditions are simple and equal 
for both parties. In more complicated transac- 
tions, the equality is not self-evident; espe- 
cially as our ideas are distorted by the prevail- 
ing system, which is based on an artificial 
inequality. 

But in a state of freedom, the rougher kinds 
of work would exchange on equal terms with 
the gentler, because the product of the rough 
work is as necessary as that of the gentle work. 
It is true that if hodcarriers were paid as 
much as merchants all sorts of evils might 
ensue. They might acquire ideas entirely "be- 
yond their station"; their children might be 
educated as well as those of the merchant him- 
self; and no one can tell what other catas- 
trophes might not happen. 

On further reflection, it would appear that 
perhaps an educated hodcarrier might not be 
such a bad thing after all. There are many 
college-bred athletes who would make excel- 
lent hodcarriers; and there is no reason why 
a well-bred hodcarrier should not be an agree- 
able companion for any other well-bred person. 

* See Appendix I. 



FREE EXCHANGE 37 

Proposition IV. 

"The product of labor in exchange is meas- 
ured by the time required for its production. 

This proposition, which is obscure when ap- 
plied to the exchange of material products, is 
self-evident when applied to direct exchange 
of services. 

If two men, seeing the advantages of work- 
ing together, one being a farmer, the other a 
carpenter, agree to aid each other alternately, 
the carpenter working for the farmer on one 
day, and the farmer for the carpenter on the 
next, the exchange is necessarily made on the 
basis of equal time of service. No man in his 
senses, and free from the complicated causes 
that now compel him to work for a minimum, 
would agree to work two days for another, in 
return for each day that the other worked for 
him. 

In the case of the fisherman above instanced 
the agreement is necessarily for an equal share 
of the product, the time devoted by both the 
oarsman and the angler being the same. 

It is only in these simplest cases, however, 
that the necessity of time measure can be 
traced ; and it is upon these primary examples, 
especially of the direct exchange of services, 
that the elementary truth of the proposition 
must rest. The great variety in the nature of 
occupations makes a direct comparison impos- 
sible in the more involved cases. 



38 ECONOMICS OF LIBERTY 

A surgeon, for example, is not expected to be 
performing operations during all his waking 
hours. The time required for reading and 
study, attendance at clinics, and repose after 
the excessive strain of a surgeon's task, make 
the actual time measurement of his work very 
brief, in comparison with the whole working 
day. 

In the same way, an opera singer is not ex- 
pected to sing every day for eight hours con- 
tinuously; nor could she under any system of 
equality. Practice, rehearsal and rest are all 
a part of her services, which appear to be per- 
formed in a brief evening hour. 

So again, a teacher is expected to do actual 
teaching for but a portion of the day, the nerv- 
ous tension during that time being excessive. 

What it really reduces itself to is not the 
exchange of hour for hour, or day for day, of 
service, but of lifetime for lifetime. 

Owing to the far from free conditions at the 
present time, we often see a very different 
state of affairs today; some of the most ex- 
hausting and life-destroying trades being 
among the worst paid. This, however, is pos- 
sible only by the partial enslavement of the 
laborer. 

Instinctively, even at the present time, men 
appeal to the standard of a lifetime of work 
unconsciously, and without any clear appre- 
hension of its full meaning. Often we hear, 
in reply to a suggestion that the price for cer- 
tain services is too high, the statement : "Well, 



FREE EXCHANGE 39 

I do not make more than a fair living," urged 
in justification. 

And the commercial rejoinder, "What do I 
care for your living or dying, if I can find 
somebody else who will do it cheaper?" com- 
monly supposed to be the irrefutable and ir- 
remediable ultimatum, is shown to be possible 
only under abnormal conditions, and the justi- 
fication of the worker to be the really scientific 
attitude. 



VALUE 

'T^HE word "value" is generally used in two 
entirely different senses, and as a result, 
confusion occurs in discussions in which value 
is involved. 

In the first place, value refers to the utility 
of the valued object and we say that we value 
it in proportion to our need of it, that is, to 
its usefulness or necessity to us. 

Bread, for instance, is of great value, as it 
is essential to support life, and so with other 
food. Clothing, shelter and fuel are all neces- 
sary for life, and are all very valuable, in con- 
sequence of their prime necessity. 

In the second place, value refers to the 
money price paid for the thing, and not to its 
utility at all, as when we speak of the value of 
a twenty-thousand-dollar diamond necklace, 
which is of no utility, still less a necessity of 
life. 

Not only are the ideas denoted by the word 
value different, they are really opposite. It is 
not the most costly things that are most nec- 
essary to life, but, on the contrary, the cheap- 
est. Water, bread, oatmeal, potatoes, salt, are 
among the cheapest commodities, yet what is 
more essential for life than these? Meat and 
coal, although costing about three times what 
they would if they were not monopolized, are 
still not expensive compared with unnecessary 
things. 

(40) 



VALUE 41 

A seat at the opera may cost the price of a 
ton of coal, yet the latter is a necessity, the 
former only an adornment of life. Everywhere 
we find the unnecessary and superfluous is the 
most costly, in direct proportion to its futility 
and superfluity; and the essentials of life 
cheap, in proportion to their necessity. 

We must find some general conception of 
value that will unite in itself and harmonize 
these two antithetical ideas. 



Proposition V, 

Value is the proportionate relation of prod- 
ucts in exchange. 

Imagine a community, self-contained, con- 
sisting of a hundred producers, divided as 
shown in the tabulation (see Table I, at the 
end of the book). 

In the first column we have the representa- 
tive occupations, and the number of members 
of the community that are engaged in each. 

In the second column is the average product 
of each, assumed as an entirely arbitrary 
figure, and not in the least as a representa- 
tion of the facts, as it is only the proportional 
and not the actual relations that we wish to 
investigate. 

Now, it is evident that each member will 
have his whole product, except such portion as 
he may retain for his own use, to exchange for 
proportional amounts of the products of the 



42 ECONOMICS OF LIBERTY 

others; and that he will require an average 
amount of one hundredth of the total product 
in each branch of production, making the total 
share of each equal to the one hundredth part 
of the whole product, and all the shares equal 
to each other. 

It is true that the needs of each will vary. 
Some, who have been provided with a house, 
will not need another until the first is worn 
out. Others will want more of transportation 
and less of tools. Others, still again, will need 
more medical treatment, at the sacrifice of a 
portion of other things. 

Production will also vary. Some from in- 
ability, some from sheer laziness, some from a 
philosophical scorn for superfluities, will pro- 
duce less than others, and will be content with 
a less return. Nevertheless, each having a cer- 
tain average amount of product to exchange, 
the average of the exchanges must result as 
the table indicates ; that is, in an average equal 
share of the total product for each producer. 

This is evident from consideration of the 
simple conditions shown in the first four 
columns; column III being the total annual 
product of each occupation, and column IV 
the average share of each member, that is, the 
amounts in column III divided by 100. 

In column V are the amounts of products 
that will exchange for each other, the exchange 
being supposed to be conducted by barter. It 
is clear that if the entire amount of the product 
of one individual will exchange for the entire 



VALUE 43 

amount of that of another, that is, if 100 
bushels of grain exchange for 12 cows, the 
same proportion must prevail when any one 
commodity is used as a unit. Thus, taking one 
bushel of farmer's product as the unit, it will 
exchange for .12 of a cow, or .30 of a book, or 
2 miles of transportation, and so on with the 
other items. 

It is this exchangeability for a certain and 
definite proportion of other commodities that 
constitutes value in use, or utility, as we may 
more briefly call it, as opposed to value in ex- 
change, or simply, price. 

This second aspect of value is shown in 
column VI. Here the money prices of the 
various items are calculated in the usual way, 
the price of a bushel of grain being taken as 
the unit. If, in column V, a bushel of grain 
exchanges for .12 of a cow, a whole cow will 
exchange for 8.33 bushels, or $8.33. 

After making all the calculations of prices, 
we compare them with the figures in column 
V, and find that they are reciprocals, and may 
be obtained from each other by simple inver- 
sion. 

The total relative quantities of products re- 
quired by the community, as shown in column 
I, or the proportional exchange quantities, as 
shown in column V, are the mathematical 
measures of the utility of products; the pro- 
portional amount of money required to pur- 
chase a unit of each product, as shown in 



44 ECONOMICS OF LIBERTY 

column VI, are the prices, which are neces- 
sarily reciprocals. 

The general reciprocity between value in 
use, or utility, and value in exchange, or price, 
which we have noted; by which the most 
necessary products are the cheapest, and the 
comparatively unnecessary the dearest — this 
general reciprocity is thus seen to be not 
merely general but specific. 

Their reciprocal nature is more distinctly 
shown by a special instance, as shown in the 
tabulation. 

Suppose that one of the toolmakers changes 
his occupation, and makes the search for 
diamonds his special business. The product of 
the diamond seeker will be the equivalent of 
the 15 tools before produced by him. Assum- 
ing that he finds only one diamond a year, each 
member of the community will be entitled to 
the one hundredth part of a diamond (column 
IV), and the price of one hundredth of a 
diamond will be one bushel of wheat, or 100 
bushels of wheat for one diamond— two and a 
half years' provision of food, the fundamental 
need of life, for one useless gewgaw! 

This result , which is denounced by the 
moralist because he does not understand it, is 
seen to be the inevitable result of the division 
of labor in proportion to the need for the prod- 
uct. The greater the importance of any prod- 
uct, the more members of the community must 
devote themselves to its production, and the 



VALUE 45 

larger will be the quantity that can be, and 
that must be, exchanged for other products. 

Value, then — absolute value — ^including both 
utility and price, is seen to be a proportion. 
It is the proportionate relation of the amounts 
of products required by the needs of the com- 
munity. 

Value, regarded as utility, is measured by 
these proportional amounts in gross, as in 
column II, or by the equivalent proportional 
amounts in exchange, measured as fractions or 
multiples of any one product, as in column V. 

Value, regarded as price, is the same pro- 
portion differently phrased, as in column VI, 
in which the proportional amount of a unit of 
each product is given, compared with a unit 
product. 

Thus the antithesis between value in use 
and value in exchange is merged in the larger 
meaning of the word value, which includes 
both, as opposite faces of the same fact. 

All this is in contravention of the usual 
economical dictum, that value is essentially 
arbitrary, and that it is determined solely by 
supply and demand. 

Demand and supply do indeed determine 
value, but not in any arbitrary or fanciful 
fashion. If the farmers' crop were only half 
the usual amount, its value would necessarily 
double; and if a book failed to meet the ex- 
pected demand, the stock of it would fall in 
value. Such fluctuations in supply and de- 
mand, with corresponding fluctuations in value. 



46 ECONOMICS OF LIBERTY 

are continually at work, but under a com- 
pletely organized industrial system they would 
not be wide and violent, as they are at present. 

Even at the present time, when privileges 
and monopolies of all kinds upset the course of 
free exchange, something of the effect of pro- 
portionality upon price is observable. 

The most powerful monopoly cannot raise 
the price of a commodity beyond a certain 
limit. The coal combination, while it may 
force the price of coal to ten dollars a ton, in- 
stead of three dollars, as it might perhaps be 
under free exchange, finds a point beyond 
which it cannot press its demands. It cannot 
possibly charge ten thousand dollars a ton, nor 
one thousand, nor a hundred, nor even twenty. 
It must sell at some approximation to the 
normal price, as determined by the relative 
amount of coal required. 

In column VII are shown the average 
amounts of each product that each member 
must receive as income or consumption, or, 
what is the same thing, must disburse as ex- 
penditure. 

These amounts are found by multiplying the 
proportional shares in column IV by the prices 
in column VI. We observe, with some aston- 
ishment, that these amounts are directly pro- 
portional to the number of members that de- 
vote themselves to the various occupations in 
column I. 

This remarkable equation leads to the con- 
clusion that what really is determined by de- 



VALUE 47 

mand and supply is the number of producers 
that shall devote themselves to each branch 
of production. That settled, the value, whether 
utility or price, is settled also; and is not sub- 
ject to sudden or excessive fluctuations. 

To make this clearer, suppose that, owing to 
the increased efficiency of the tools produced 
by the toolmakers, the product of the tailors 
was doubled. Manifestly, if this were to oc- 
cur without some further adjustment of the 
economic relations, the surplus product of the 
tailors could not be sold. 

The real outcome would be that fewer mem- 
bers would devote themselves to tailoring. If 
the tailors' efficiency were doubled, only half 
the number would be required to produce all 
the clothes that the community could wear; 
that is, four instead of eight, leaving the other 
four free to devote themselves to producing 
additional luxuries. 

The results are shown in the lower two lines 
of the tabulation in Table I. 

In place of 8 tailors producing 20 suits each, 
4 would produce 40 suits each, but the same 
total amount — 160 suits. This would give each 
member of the community 1.60 suits for his 
annual supply, an amount just equal, by hypo- 
thesis, to the demand. Yet, in the face of this 
equality, the price could be only half of what 
it had been before — $2.50 per suit instead of 
$5.00 — leaving an equal amount to exchange 
for the additional luxuries, which the 4 released 
tailors would devote themselves to producing. 



48 ECONOMICS OF LIBERTY 

The clear conclusion is that by reducing the 
proportionate number of the members of a 
community which is required for the produc- 
tion of a certain product, the price of the prod- 
uct is reduced also, although the demand for 
it and the supply of it remain unchanged. 

This conclusion is supported by the ob- 
served facts. We continually find commodities 
cheapened by the invention of machinery for 
their manufacture, making their production by 
a smaller number of individuals possible, al- 
though the supply and demand remain sub- 
stantially unchanged. These results are often 
obscured by an additional premium paid to the 
holder of the patent privilege, or by some trade 
combination to keep the price up. 

An instance may be seen in the manufacture 
of shoes. By improvements in machinery, and 
still more in organization, shoes have been re- 
duced to half their price in the past, with im- 
provement in the quality; the proportionate 
number of shoes worn being, no doubt, some- 
what greater, but by no means in proportion 
to the reduction in price. 

We may set down these conclusions in the 
form of propositions. 



Proposition VI, 

Tfte average share of each producer is equal 
to the total product divided hy the number of 
producers. 



VALUE 49 

Proposition VIL 

The average expenditure of income of each 
producer is in direct proportion to the num- 
ber of producers of each product. 

It is to be especially noted that, in a condi- 
tion of freedom, the price of labor is identical 
with the product of labor. The reward of labor 
is its whole product; not, as at present, a part, 
and often a very small part, of its product. 

The cheapening of any product by improve- 
ments in the methods of production does not 
diminish the income of its producer. He will 
indeed at first cut down the price, in order to 
secure increased sales ; and the reduction must 
be to just that point at which the increased 
sales give him a larger income. Others who 
produce the same product must adopt the same 
improvements, if they are still to compete in 
price; and they will do so just so far as they 
are compelled, by finding a portion of their 
product remaining on their hands unsold; the 
larger amount sold by their competitors being 
sufficient to satisfy all demands. 

This will continue until some of the pro- 
ducers of the commodity in question, being the 
last to adopt improvements, will find them- 
selves unable to make a living; the larger 
amount produced by their competitors being 
sufficient to satisfy all demands; and they will 
be forced to take up some new branch of pro- 
duction. 



50 ECONOMICS OF LIBERTY 

At the same time a fund is provided ready for 
them in their new occupation. 

The benefit of the improvement is spread 
over the entire community by the lower price 
at which all the members can now obtain the 
product in question. The surplus remains in 
the hands of each member, ready to reward 
those who have entered upon the production of 
some new product, to satisfy a want hitherto 
unprovided for. 

There is no limit to this process. The new 
wants and tastes and desires of mankind that 
arise after their first needs are satisfied are lit- 
erally limitless; and the same progress that 
leaves an unexchanged balance in their hands 
that may be exchanged for new luxuries, at the 
same time sets free a proportionate body of 
producers, ready to produce the new luxuries. 

The reward of the producers grows as the 
products of their labor cheapen. That is, the 
more things are produced the larger is the 
quantity of each that can be exchanged for 
others, and the cheaper are all products ; while 
at the same time, and with the same exertion, 
the producer receives a larger variety and an 
increased total amount of products. Thus we 
reach : 

Proposition VIIL 

The reward of labor rises as the prices ot 
products fall. 

This is as it should be. Clearly, if every- 
body is producing more products and a greater 



VALUE 51 

variety of products, everybody's reward, meas- 
ured in products, will be greater, while the 
products themselves will be cheaper. 

The cheaper things are the dearer labor will 
be under free exchange ; instead of, as now, the 
price of labor being lower when the price of 
things is lower. The present state of affairs 
is indeed an intolerable economic absurdity, 
which prevails, and can prevail, only when the 
laborer is partially reduced to slavery. 

If he were completely reduced to slavery, his 
body would have a market price ; and it is only 
because he is partially reduced to slavery that 
his labor now has a market price, rising and 
falling with the market prices of other com- 
modities. 

It is in this way, too, that our first proposi- 
tion, that all production leaves a surplus, is 
exhibited in the organized community. The 
greater production, which is the necessary re- 
sult of invention, immediately results in a low- 
ering of prices, and the freeing of a portion of 
the producers for the production of new and 
before unthought of refinements. 

At the same time, a proportional amount of 
products is freed, for the compensation of the 
workers who would otherwise be thrown out 
of work. 



EQUALITY 

n^HE dream of the ages, the equality of all 
men, financially as well as politically, is 
then no dream, but a cold mathematical fact ; to 
which the hypothesis of free production and 
exchange necessarily leads. 

It is true that neither free production nor 
free exchange yet exists; nevertheless all the 
tendencies of the progress of the world are to- 
ward such a condition of freedom. In time, 
and in no very great time, it must be attained, 
unless some such setback should again occur 
as occurred at the fall of the Roman civiliza- 
tion. That such a setback should come seems 
impossible to our present sight ; it is well there- 
fore that we prepare our hearts and minds for 
what our great-grandchildren may see, if our 
grandchildren do not. 

For the present system of misery and super- 
fluity; of want for most and destitution for 
many, that a few may have too much; of the 
insolence of wealth and the cringing of pov- 
erty ; of satiety and ennui on the one hand, and 
the gulf opening at their feet on the other — 
this modern civilization, which it is heresy to 
hint is imperfect, is almost worked out; has 
almost reached the impossible stage, when in- 
stitutions fall of their own weight, with no 
hand raised to overthrow them. 

Yet there are some who cannot see the lan- 
tern held by Progress to light their path; to 

(52) 



EQUALITY 53 

whom the present reign of unreason and in- 
equality appears to be final ; to whom the sug- 
gestion of equality as the foundation of the 
coming civilization will seem the prospect of 
hell rather than of heaven. 

"What," they will shriek, "do you mean to 
reduce all men to a dead level; to apotheosize 
dull sameness and monotonous uniformity; to 
lower the brilliant, the intellectual, the vir- 
tuous, to the same plane with the stupid, the 
idle, the vicious ! Do you want to build your 
civic halls and churches with their domes and 
steeples on the ground and their foundations 
in the air? It is a pretty world of topsyturvy- 
dom that you propose !" 

Where fear rules, reason is silent. 

Is it indeed true that equality in wealth is 
such a terrible thing? Is it to be apprehended 
that such equality means a dead level of 
mediocrity — a triumph of incapacity? 

Not in the least. It is only to the disordered 
imagination that these green and yellow bogies 
present themselves. 

The smallest consideration will show, what 
is today so conspicuously the fact, that inequal- 
ity of fortune, as it now exists, obscures, and 
at times entirely conceals, the distinction that 
mental or physical skill or strength would 
otherwise secure. It is the glitter of wealth 
that is at the foundation of our social distinc- 
tions, and of most of the recognition that we 
give to the individual. 



54 ECONOMICS OF LIBERTY 

Take away this inequality; let wealth reach 
the approximate level that it must some day 
reach; and the money estimate of a man van- 
ishes, and his real worth is for the first time 
made the basis of our esteem for him. 

After all, what is there so terrible in the idea 
that a coalheaver should be a companion in- 
tellectually for a professor? Are there not 
many professors of powerful physique who 
would really prefer an outdoor life of physical 
activity? Are there not many handworkers 
who, in everything but polish, are fully the 
equals of many of the professional class? 

Difficult as it may be for us to admit it, there 
is no reason why, with equality of reward, all 
kinds of manual labor should not deserve and 
receive equal social esteem with professional 
occupations. 

Even now among the wealthy there are 
many whose manners should exclude them 
from well-bred society; yet all these things 
come with an increase in the reward of labor. 
The first generation may be an impossible set 
of barbarians outwardly, but inwardly they 
have all the capabilities of the most polished 
circles. The next generation will acquire such 
knowledge as may be obtained from schooling ; 
and in the third, at least the beginning will be 
attained of that combination of self-respect and 
gentle manners that we call good breeding. 

One of the most polished men that I have 
known was the son of a washerwoman; an- 



EQUALITY 55 

other, a bricklayer's son, became a Greek 
scholar and a poet. 

The most frequent excuse for inequality of 
reward is that inequality of fortune must exist 
as long as the inequality of talents or abilities 
is so great. A statement of the case which 
appears plausible, and indeed is irrefragable 
under the present form of society, in which 
labor is bought and sold like cheese. 

With freedom of production and exchange, 
a little consideration will show that inequality 
of abilities is an essential condition for equality 
of incomes. 

At present, the market for labor follows the 
same rule as the market for commodities; the 
most necessary, and therefore most abundant, 
labor is the cheapest, the rare and luxurious is 
the most costly. The bricklayer and the 
butcher are paid but little, while such luxuries 
as a bank president come high. 

But, under freedom, labor ceases to be a com- 
modity. The bricklayer is as necessary to the 
architect as the architect is to the bricklayer — 
more so, indeed, as forty bricklayers are needed 
for one architect. Relying on his value, and 
enabled by freedom to find a full demand for 
his services, the bricklayer will esteem his labor 
as equal to that of the architect, and will ex- 
change only on equal terms. 

It is true that the routine occupations, such 
as digging, tending a machine, and the like, 
require neither special education nor excep- 
tional gifts. On the other hand, such routine 



56 ECONOMICS OF LIBERTY 

occupations are peculiarly irksome, especially 
to men of exceptional gifts. But both the men 
of exceptional gifts and the work that requires 
them are rare ; while the ordinary men and the 
ordinary jobs are abundant. If every man 
wanted to be captain, there would be no sailors ; 
yet that is no reason why the sailors should go 
on short rations. 

If all men were equally capable and all de- 
sirous of doing the same thing, society could 
not exist. It is because each man is different 
from all others that the infinite division and 
subdivision of occupations becomes possible, 
which is the foundation of an industrial society. 

It is not to be supposed that the equality of 
a developed social organization will be an abso- 
lute, cast iron, precise, mathematical equality 
of income. There will always be minor differ- 
ences from various causes. Some will prefer 
to work less, and to receive less. Differences 
in natural ability that are not covered by dif- 
ferences of calling will still exist. But the 
differences will be moderate and temporary, 
with as powerful a tendency, active all the time, 
toward equality, as there is now toward in- 
equality. 



PRIVILEGE 

TT is time for us to consider the disturbing 

forces, to which allusion has been made, 
which prevent the free action of industry and 
the substantial equality of fortunes, that in the 
absence of these forces would prevail. 

Conceive that in the typical community 
tabulated in Table I, a certain number of the 
members, ceasing themselves to produce, were 
empowered to take from each of the remaining 
members a portion of his product. 

Such power over the persons or products of 
men is called privilege; and such privileges 
have always existed in the past and still exist, 
in mitigated, but not less powerful forms. 

Just what the privileges are by which this 
is accomplished, we need not now dwell upon. 
At present our business is with the operation 
of privilege in general — abstract privilege — the 
power of one to command the services of an- 
other without compensation. 

In order to show the working of privilege, 
let us construct another table (see Table II. 
at the end of the book), showing the same 
community of 100 persons, with the results 
that occur when they are deprived of a certain 
part of their products. 

We deal here only with the total number of 
members; not with the separate branches 
shown in the previous table. 

(57) 



58 ECONOMICS OF LIBERTY 

The first line in this new tabulation shows 
the natural equal distribution of products, 
where privilege does not exist. The total 
product, symbolized by 100, is divided equally 
among 100 persons, giving to each a share de- 
noted by 1. 

If we suppose that ten per cent of the mem- 
bers, ceasing themselves to produce, are privi- 
leged to take from each of the remaining pro- 
ducing members twenty per cent of his product, 
an entirely new and unanticipated state of af- 
fairs supervenes. 

Each of the privileged class will receive a 
portion in excess of that received by any of 
the producers, denoted by 1.80. With this ex- 
cess, for which indeed there is no other use, 
privilege will be enabled to support a certain 
additional number of the producers as personal 
servitors. Thus the proportion of the privileged 
grows rapidly ; as these personal servitors, thus 
enlisted in the service of privilege, become at 
once a part of the privileged class, by virtue 
of their new allegiance. 

Privilege appoints one a policeman, to keep 
order in the ranks of the workers, and to pre- 
vent them from exhausting their productive 
powers in idle quarrels, or from doing or say- 
ing anything questioning established privi- 
leges. 

Another is appointed a judge, another a law- 
yer, whose functions are to erect a body of 
rules favorable to privilege. 



PRIVILEGE 59 

Yet others will be priests and ministers, 
whose business it is to encourage reverence for 
privilege, and to foster a code of morals having 
no relation to the real requirements for justice, 
but composed of conventional rules calculated 
for the support of the existing order. 

Others, again, will be made teachers and 
professors, to inculcate in the young respect 
for authority and submission to privilege. 
Finally there will be still others, called soldiers, 
armed, adorned and adulated, ready at com- 
mand to kill those who may attack privilege. 

These, together with their masters, the hold- 
ers of privileges, constitute the privileged order 
in our present society, and constitute also the 
nonproductive class; for, no matter how hard 
individuals belonging to it may work, nor how 
satisfactory their efforts may be to their mas- 
ters, they produce nothing exchangeable, and 
their functions would be superfluous in the 
absence of privilege. 

No doubt, in the most perfect society, there 
would be differences to be composed and limi- 
tations of liberty to be defined, but between the 
arbitrator, earning an income equal to the rest, 
and maintaining his vocation by the justice of 
his decisions, and the present semidivine crea- 
ture, with his court paraphernalia and pres- 
tige, the difference is generic. 

So also is that between the military arma- 
ment of privilege and the theoretically possible, 
but practically hardly necessary fighter for 
liberty. 



60 ECONOMICS OF LIBERTY 

Table II shows the relation between the por- 
tion of the product which is taken by the con- 
tinually growing nonproducing class, and that 
which remains for the producers. 

At first, we suppose that only ten per cent 
of the membership belongs to the nonproduc- 
ing class, and that twenty per cent of the prod- 
uct is taken. This will leave 90 producers, and 
the total product will be 90. Of this, by the 
hypothesis, the nonproducers are to receive 20 
per cent, which is 18; the rest, 72, remaining 
for the producers. Thus, although the total 
product has been reduced only 10 per cent, the 
share of the producers has been cut down 28 
per cent. 

In the same way, as privilege gradually in- 
creases its encroachments, the total product 
continues to diminish, as shown in the succeed- 
ing lines in the table, because more and more 
producers are withdrawn from production ; and 
the share that the remaining producers receive 
diminishes still faster, as the ratio of the part 
taken by privilege increases. 

In column VII, the share of each producer 
diminishes in arithmetical progression, from 
.80 to .60, .40, .20. In column VIII the part 
taken by each nonproducer also diminishes, 
though its relative increase is very great; the 
diminution running from 1.80 to 1.60, 1.40, 1.20, 
in an increasing ratio to the share of the pro- 
ducer. 

This increasing ratio between the parts taken 
by the producer and nonproducer is shown in 



PRIVILEGE 61 

column IX, changing at first by a fraction, then 
at one step doubling, and with another leaping 
out into infinity. 

The table represents a theoretical condition 
which is never completely realized, in which 
the rate of production remains constant. 

In all progressive societies, mechanical in- 
ventions have so vastly increased the amount 
of individual production, as to far more than 
counterbalance the depletion of the ranks of the 
producers by privilege; so that the individual 
product, instead of remaining constant, should 
increase in rapid progression, to represent at 
all adequately the state of modern society. 

Such is the condition shown in the revised 
table. (Table III, at the back of the book.) 

Here the individual product at each succes- 
sive stage, as shown in column III, is assumed 
to be double that of the previous period, in- 
stead of a constant amount. Just what the 
increase really is would be impossible to deter- 
mine; nor does it matter, as it is a general 
principle that we seek, and not a special case. 

As might be expected, the actual shares of 
both producers and nonproducers are enorm- 
ously increased by the rapid growth of pro- 
ductive capacity. This increases as 1, 2, 4, 8, 
in column III, and the total amounts, in column 
IV, would be proportionately great, were it 
not for the diminishing number of producers, 
although, at first, the diminution is not rapid 
enough to overcome the advantage gained by 
the growth of productive power. 



62 ECONOMICS OF LIBERTY 

The combined result of this increase in prod- 
uct and decrease in the number of producers is 
shown in column IV, which represents the 
total product, and increases by strides, yet not 
so fast as the rate of individual production, 
being 100, 180, 320, 560, compared with 1, 2, 
4, 8, in column III. 

Now of these total amounts the producers 
will receive, at any period, a share represented 
by a certain percentage of the product, dimin- 
ishing more rapidly than the numbers of the 
producers. From the 100 per cent which is 
received when privilege takes no portion, it 
will decline to 80, 60, 40 per cent, as in column 
V, while the number of producers declines to 
90, 80, 70, and so on. 

In spite of the extremely rapid increase of 
the factors in column IV, the products of these 
by the diminishing rates of percentage in col- 
umn V show a maximum at the fourth step, 
thence falling to zero, even more rapidly than 
they had increased. The last step, in which 
privilege takes the whole product, is manifestly 
impossible, as something, however little, must 
be left for the workers to live upon. 

The returns to the privileged nonproducer 
grow fast, as shown in column VIII, almost 
doubling in each of the first two steps from 
3.60 to 6.40, and from 6.40 to 11.20; but at the 
same time the returns to the worker also in- 
crease from 1.60 to 2.40 and 3.20. At this 
point, however, the returns to the worker reach 



PRIVILEGE 63 

a maximum, while those to the nonproducer 
continue to increase. 

This explains how it is that the workers may 
be in an apparently flourishing condition, as 
it is often pointed out that they now are, while 
ruin is nevertheless impending. 

It is true that the producers now enjoy many 
comforts and luxuries which formerly they 
could not obtain; but when it is argued that 
they should therefore demand nothing more, 
this demonstration confounds the conclusion. 

It shows that society has now reached or is 
approaching the maximum stage, represented 
in column V by a total share of 224 for the 
producers ; and that if the portion taken by the 
privileged is increased beyond this, even by a 
small advance, the catastrophe will be universal 
and overwhelming. 

The curves illustrating these conclusions are 
shown on the next page. 

Recurring to Table II, a very different state 
of affairs is shown to prevail when the rate of 
production is constant. The rate of deduction 
by privilege both from the number of the pro- 
ducers and from their product is the same in 
both cases; yet the portion divided among the 
producers, as shown in column V, does not 
exhibit the culmination to a maximum and 
swift decline afterward that occurs when pro- 
duction increases rapidly. 

On the contrary, the maximum is at the be- 
ginning, whence it steadily declines, and may 
be arrested at any stage by the cessation of 



64 



ECONOMICS OF LIBERTY 



Curves Showing Comparative Portions of 

Product Received by Producer 

and Non-producer 











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PRIVILEGE 65 

the exactions of privilege. Such seems to have 
been the history of the Oriental nations. 
Privilege is as rampant there as it is here ; yet 
as the rate of production is substantially con- 
stant, and is not accelerated by labor-saving 
inventions as it is in the Occident, there is no 
growth in the reward of the workers, and no 
impending sudden decline. 

The maximum point, between the third and 
fourth ordinates in the diagram on the next 
page, is the revolution point. Up to that time, 
in progressive societies, the producers have 
enjoyed an increasing share, although small in 
comparison with the amount taken from them. 
They have accordingly been tolerably satisfied, 
realizing their condition to be somewhat im- 
proved. 

Taking advantage of this, the privileged 
class endeavors to secure a still greater por- 
tion, believing the producers to be prosperous, 
and not aware of the inevitable descent. The 
producers, feeling rather than understanding 
that they are face to face with ruin, resist, in 
a way that privilege does not in the least com- 
prehend. 

Such a point our civilization appears to be 
reaching. 

Wealth abounds; splendor sparkles every- 
where ; it is the golden age returned. One step 
more, and the crash is at hand ! 



It must be borne in mind that the foregoing 
discussion aims at elucidating general princi- 



66 ECONOMICS OF LIBERTY 

pies, by postulating a theoretical society of 
simple organization, in which no producer has 
any benefit from privilege, and none of the 
privileged takes any part in production. 

Our present society is complicated beyond 
the possibility of formulation, for the reason 
that privilege is widely, although very un- 
equally, distributed, while few of the privileged 
take no part in production. 

Hitherto we have spoken of privilege in the 
abstract ; we are now to consider the most im- 
portant forms of privilege, as it exists at pres- 
ent, through which the products of labor are 
taken from the producers. 



LAND OWNERSHIP 

TN a commercial society there are two gen- 
eral divisions of activity, production and ex- 
change. 

Corresponding to these there are two forms 
of privilege by which all industry is controlled ; 
land ownership, which controls production, 
and the money privilege, which controls ex- 
change. Our business now is with the first of 
these, namely, the privilege of land ownership. 
The word land, in its economic sense, is used 
in a far wider significance than in its usual 
colloquial meaning. Land, in the economic 
sense, means all natural opportunities for labor 
to exert itself. 

Labor, in order to produce, must have ma- 
terial whereupon to work, a place to stand 
while working, a place to lie while sleeping. 

The farmer uses land directly; the cobbler 
and actor both directly and indirectly. Both 
cobbler and actor must have a place to live and 
a place to work, and for these they use land 
directly; the cobbler, in addition, must have 
leather, which ultimately comes from the soil ; 
and both cobbler and actor must have food, 
which also comes from the soil; and for these 
they are dependent upon the land indirectly. 

Even water is land, economically speaking. 
Opportunities to produce are presented by 
waterfalls for power and by rivers for irriga- 
tion, by lakes and oceans for fisheries, and by 

(67) 



68 ECONOMICS OF LIBERTY 

all navigable waters for transportation. Al- 
though the high seas are free to all, after they 
are once launched upon them, yet the sailor 
must have land whence to embark and whereon 
to disembark. 

If the whole earth were owned by one man, 
it would mean that he would have absolute 
power, in law, to prevent all the rest from 
working or even existing upon it. He could 
put up his signs, "Trespassers not allowed," 
and there would 'Be nothing for it but to emi- 
grate to another planet. 

Or if the earth were owned by a hundred 
million men, it would leave the remaining nine 
hundred million equally subject to the sover- 
eign will of the land owners. 

And that is precisely the state of affairs that 
prevails today. The population of the earth is 
estimated at something like fifteen hundred 
millions. Of these how many are land own- 
ers? We can only guess. One in ten? Surely 
not as many as that. One in a hundred? Per- 
haps one in a hundred. That would be fifteen 
millions who own the earth and hold the lives 
of the remaining fourteen hundred and eighty- 
five millions in their hands. 

For the owner of the land controls every- 
thing and everybody upon it; and if these fif- 
teen million land owners were to order the 
rest off their land, where could they go? To 
the high road perhaps, where they might walk 
until they starved, leaving the land owners the 
sole inhabitants. 



LAND OWNERSHIP 69 

But the game of the land owners is not to 
order people off the earth. Far from it ! What 
they want is that as many people as possible 
should live and labor upon the earth — their 
earth — on condition that they give the land 
owners a large part of their product, in the 
form of Rent. 

Rent is the part of the product taken by the 
land owners from the producers for permitting 
the producers to go to work. 

But, you may say, I have no interest in land 
rent. I am a clerk, working for $16.00 a week. 
I do not use land. What have I to do with 
the land question? 

Your employer is perhaps a merchant, who 
pays $20,000 a year for his warehouse. If it 
is in New York City, at least $10,000 of that 
will be for ground rent. He employs half a 
dozen bookkeepers, and as many salesmen and 
porters, possibly twenty in all. If he paid no 
ground rent there would be $500 apiece avail- 
able to raise the wages of all hands. Have 
you, indeed, no interest in rent? 

And how much do you pay for board? And 
of her expenses, what part does your boarding- 
house keeper pay for ground rent? And the 
dealer from whom you buy your clothes — 
what ground rent does he pay? On every side 
you are bled by Rent. 

And what does the land owner give in re- 
turn? Remember, we are not speaking of 
buildings, but of the land only upon which the 
buildings stand. 



70 ECONOMICS OF LIBERTY 

The land owner gives nothing whatever, 
but permission to you to live and work on his 
land. He does not give his product in ex- 
change for yours. He did not produce the 
land. He obtained a title at law to it; that is, 
a privilege to keep everybody off his land until 
they paid him his price. He is well called the 
lord of the land — ^the landlord! 

Even if the merchant has bought his ware- 
house outright, so that he pays no rent directly, 
he still pays rent indirectly, through the pur- 
chase price paid to the previous owner. 

Directly or indirectly everybody must pay 
rent to the owners of the soil. Either in the 
form of annual or monthly payments, or in the 
form of a price paid for purchase, everybody 
must pay for a place to live upon and a place 
to work upon. 

But, you will say, men must be secure in the 
possession of the products of their labor; and 
how can they be secure unless they own their 
land? 

There are two kinds of land ownership, pro- 
prietorship or property, by which the owner is 
absolute lord of the land, to use it or to hold it 
out of use, as it may please him; and posses- 
sion,* by which he is secure in the tenure of 
land which he uses and occupies, but has no 
claim upon it at all if he ceases to use it. He 



* Strictly, it is incorrect to call possession owner- 
ship. The word is used to convey the idea that se- 
curity in possession may be attained without abso- 
lute ownership. 



LAND OWNERSHIP 71 

cannot hold it out of use, and prevent others 
from using it. For the secure possession of 
his crops or buildings or other products, he 
needs nothing but the possession of the land 
which he uses. 

For instance, in the mining regions, vast 
areas of mining land are held out of use by the 
mining companies, which own all the land 
about. How long, do you think, would these 
terrible strikes in Colorado and Michigan and 
West Virginia have lasted, if the miners had 
been free to go to work and open up new mines 
on the unused land? Not an hour! Not a 
minute ! 

All that is necessary to do away with Rent 
is to do away with absolute property in land; 
to make all land that is not in use free to any- 
body to enter upon it and use it. 

Nor will any temporizing measure short of 
this suffice. Great as were the services of 
Henry George in familiarizing people with the 
destructive nature of our present system of 
land tenure, his single tax scheme cannot be 
regarded as a remedy. 

For the reason that, if rent must be paid, it 
is no particular relief to pay it to the govern- 
ment in the form of a tax, rather than to pay 
it to an individual in the form of rent. 

If the coal miners of West Virginia were 
free to go to work and open up new mines on 
any unused land, it would immediately relieve 
the situation; but if they first had to pay a 
government tax, almost equal to the rental 



72 ECONOMICS OF LIBERTY 

value, they would be as badly off as ever; the 
land would be as inaccessible as ever. 

No, the only real remedy is a change of heart, 
through which land using will be recognized as 
proper and legitimate, but land holding will be 
regarded as robbery and piracy. 



Economists distinguish two forms of rent, 
what is called economic rent and monopolistic 
rent. 

Economic rent is the difference in produc- 
tiveness of different localities. Thus, of two 
mines, one of which was richer in ore than the 
other, the additional product of the richer mine 
would constitute the economic rent of it. 
Monopoly rent is the price demanded by the 
owner of the soil, whether as a lump purchase 
price or as the usual periodical rental pay- 
ments, regardless of its productiveness.* 

It is monopoly rent that results in vacant 
land. 

By making all unused and unoccupied land 
free for anybody to use, monopoly rent would 
disappear, and monopoly price, the speculative 
price at which vacant land is held, which is 
equivalent to rent, which is, in fact, monopoly 
rent capitalized, could no longer exist. 

But economic rent — - the advantage that 
might inhere in any particular piece of land, 
from greater fertility of soil or superiority in 
situation— this economic rent would still re- 



* See Appendix II. 



LAND OWNERSHIP 73 

main. With this difference, however, that the 
greater product would inure to the profit of 
the users of the land, not of some so-called 
land owner. 

The tendency of economic rent is always to 
reduce itself to a minimum; because the in- 
herent advantages of land are variable. That 
is, a disadvantage for one sort of use is often 
an advantage for another. 

On the shores of Lake Michigan are certain 
barren, sandy tracts, until recently regarded as 
almost worthless for any use. It has been 
found that they are peculiarly suited for grow- 
ing peas ; and now large quantities of peas are 
produced upon them, and the price of land 
there has risen tenfold. 

The difference in natural advantages upon 
which economic rent is based, are like the dif- 
ferences in natural ability of the workers ; they 
are differences in kind rather than in degree. 
The stupid, stolid worker may be better fitted 
for certain kinds of work than one of more in- 
telligent, nervous organization. The swamp 
may not grow wheat; but may be admirably 
suited to cranberries. 

The differences in product caused by differ- 
ences in personal qualities and differences in 
the qualities of the land both tend toward a 
minimum, and eventually toward extinction. 

Proprietorship in land, upon which monopoly 
rent, and its equivalent, speculative price, are 
based, is quite different. It is wholly an arti- 
ficial privilege, which all the powers of govern- 



74 ECONOMICS OF LIBERTY 

ment, and of our privilege born law, are ex- 
erted to uphold. 

The rent of monopoly, so far from being an 
addition to the product of the worker, is a de- 
duction from it, entirely to the advantage of 
the landlord, and continually tending toward 
a maximum, as the land becomes more and 
more completely monopolized. 

Both government and law exist, as any law- 
yer can tell you, to protect property, that is, 
proprietorship in land among other forms of 
property. Without force, that is, government, 
proprietorship in land would cease ; and, on the 
other hand, without proprietorship there would 
be no function for force government, and it 
would lapse into a more perfect form of social 
organization. 

A free association would uphold the pro- 
ducer in the possession of land for use ; and all 
efforts to restore the land to the people must 
include, as a necessary condition, the extinc- 
tion of the governmental form of organization 
and the erection of free society. 



THE MONEY PRIVILEGE 

QOMETIMES, instead of purchasing a com- 
modity out and out, people want to buy only 
the use of it, for a longer or shorter period. 
The price paid for such temporary use is com- 
monly called hire. A horse and buggy hired 
from a livery stable, a room at a hotel hired 
for the night, a house or apartment hired by 
the month or year, are instances. 

In precisely the same way money is often 
hired, and the hire paid for the use of it is 
called Interest. 

In the past, when gold and silver were the 
only money, the hire of gold and silver was on 
the same footing as that of any other com- 
modity. . Large sums were paid for the use of 
money, because the available amount of gold 
and silver was far less than was needed to 
carry on the commercial transactions of the 
times. 

From its nature, money is peculiarly adapted 
for hire. Gold and silver money is something 
that nobody wants for itself, but only for the 
purchase of other things. It is used only 
when it is expended. It is true that it may be 
kept, and melted down and made into watch 
cases and jewelry; but then it ceases to be 
money and becomes a commodity of a different 
sort. As money, its use is needed only tem- 
porarily. 

(75) 



76 ECONOMICS OF LIBERTY 

The merchant who needed to replenish his 
stock of goods, could do it with the money 
that he hired, as well as if he had owned it; 
and when the goods had been sold, he could 
pay it back to the lender, together with the 
price paid for its hire^ — the Interest. 

As long as gold and silver were the only 
money in use, such money was lent by the 
money lender, just as horses were lent by the 
livery stable keeper; and the large prices ex- 
acted as interest were possible only because 
of the natural restriction of the supply of gold 
and silver. 

Modern money is an entirely different affair. 
Modern money is almost altogether credit 
money. Gold is used to a certain extent; but 
the great bulk of the money in use is not gold 
but promissory notes, called bank notes — 
paper money, in short. 

These bank notes are promises to pay on 
demand, like the ordinary promissory notes of 
individuals, with this difference that the law 
requires individual promissory notes to be 
endorsed by each holder, while it permits the 
bank notes to pass from hand to hand with- 
out endorsement. This power of passing from 
hand to hand without endorsement constitutes 
the bank notes currency, while the notes of 
individuals are not currency. 

In addition, the notes of the individual are 
for irregular, fractional and usually large 
sums, while those of the bank are for regular, 
integral and comparatively small sums. 



THE MONEY PRIVILEGE 77 

The business of a bank is to lend money; 
which amounts, nowadays, to lending credit. 
All the credit notes — the ordinary bank notes 
— in circulation were originally borrowed from 
some bank. 

"You are living on borrowed money," says 
a man to his friend. "Not at all; this money 
in my pocket is my own ; it is not borrowed," 
answers his friend. "You may not have bor- 
rowed it," is the reply, "but somebody origin- 
ally borrowed it, without doubt." 

And with perfect truth, for there is no way 
to obtain bank notes but from a bank, and the 
bank does not give them away, but lends 
them. In this way, the charge that the bank 
makes for the use of its notes— the interest — 
is a continual and universal tax upon all the 
members of the community. 

Not an old woman that buys a paper of pins, 
without yielding a part of the price to the 
banks as interest! 

(For the sake of simplicity, I make no men- 
tion of minor matters, such as United States 
certificates. What I state is substantially true 
of the great bulk of the currency.) 

The mechanism by which these current 
notes are obtained from the bank is this: A 
merchant sells a bill of goods to a retail dealer. 
The retail dealer does not pay currency for 
them; he gives his promissory note, payable 
in sixty or ninety days. This note the whole- 
sale dealer takes to his bank, and the bank 
gives him credit on its books for the amount 



78 ECONOMICS OF LIBERTY 

of the note, less the bank's profit in the form 
of a discount. The merchant is then entitled 
to draw checks against this credit, in payment 
of his own debts, for stock, for rent, for em- 
ployees' wages. Many of these debts are set- 
tled by check; others, such as employees' 
wages, require currency. 

The bank will not discount the merchant's 
note, unless it is sure of his solvency; so that 
what the bank really does is to certify to the 
merchant's solvency, and issue its own current 
notes, in place of the individual promissory 
note that it receives. 

The service that the bank thus performs is 
indispensable, the only question is as to the 
amount of payment that it receives for its 
services. 

Nominally the rate of discount is the cur- 
rent rate of interest — four, five or six per cent 
— practically it is much more. 

And for this reason : Almost all checks ulti- 
mately are paid in currency. The check given 
by the merchant for his stock goes to the 
manufacturer, who ultimately must have cur- 
rency to pay his employees ; and so with other 
checks that he may give — almost all mean cur- 
rency sooner or later. 

Now this currency is spent for groceries, 
meat, clothing and all the needs of life; and is 
immediately redeposited in some bank by the 
grocer, butcher or clothier, and used again by 
the bank to discount some other merchant's 
note. Thus the same currency is lent by the 



THE MONEY PRIVILEGE 79 

bank over and over again, so that the interest, 
in the form of discount, is doubled and tripled 
and often quintupled or more. And that is 
why banking is such a profitable business. 

The reason why the banks are able to make 
such large profits, on what, after all, is the 
simple and safe business of certifying to the 
solvency of a man whose solvency is assured, 
is that the amount of current notes is limited 
by a series of governmental restrictions. 

In the first place, there is the legal tender 
law, that all debts must be paid in gold. This 
includes the current notes of the bank, which 
are supposed to be redeemable at any moment 
in gold. Every bank is required to carry a 
certain amount of gold for the redemption of 
its notes. The amount of gold that the bank 
carries is far from sufficient to redeem all its 
notes, but the reserve, as it is called, must not 
fall below a certain minimum. 

As this minimum is approached, the bank 
restricts its loans, and raises its rate of dis- 
count. In times of stress, when currency is 
much needed, the bank may refuse to make 
any loans, thereby precipitating one of the 
commercial panics that so frequently occur. 
The newspapers are in the habit of attributing 
such panics to a foolish and unreasonable "loss 
of confidence." It is natural that a merchant 
whose notes have hitherto been freely dis- 
counted, should "lose confidence" when dis- 
count is refused. His warehouse may be 
overflowing with valuable merchandise, his 



80 ECONOMICS OF LIBERTY 

assets far in excess of his liabilities, yet he may 
be forced into bankruptcy, simply because the 
gold reserve of the bank is low. 

In the second place, there are various laws 
of the different States and of the United 
States, arbitrarily prohibiting the manufacture 
and loan of current notes by anybody but a 
lawfully organized bank; with penalties rang- 
ing from fine to imprisonment. By the Fed- 
eral law the fine takes the form of a ten per 
cent tax upon the notes circulated, which acts 
as a complete prohibition. 

Were it not for these restrictive and pro- 
hibitory laws which support the money privi- 
lege or banking monopoly, it would be easy to 
start competitive banks; and, with free com- 
petition, the charge for money lent would be 
brought down to a minimum, as in other kinds 
of lending business. 

A livery stable keeper, for instance, must 
charge enough to pay for feed, care, cleaning 
and all incidental expenses, and for the replace- 
ment of his horses and vehicles as they wear 
out; and in addition his personal income or 
wages. 

Under free conditions, the same would occur 
in banking. 

If people were as free to establish banks and 
lend currency as they are now to establish 
livery stables and lend horses, competition 
among banks would reduce the rate of interest 
to the minimum necessary to cover expenses 



THE MONEY PRIVILEGE 81 

and to give them who were employed in the 
business an equitable wage. 

This minimum interest charge, it has been 
calculated, would be about one-half or three- 
quarters of one per cent, instead of the present 
ruinous and exorbitant charge of fifteen or 
twenty per cent. 

Upon the monopoly rate of interest for 
money that is thus forced upon us by law, is 
based the whole system of interest upon capi- 
tal, that permeates all modern business. 

With free banking, interest upon bonds of 
all kinds and dividends upon stock would fall 
to the minimum bank interest charge. The 
so-called rent of houses and other improve- 
ments would fall to the cost of maintenance 
and replacement. 

All that part of the product which is now 
taken by Interest would belong to the pro- 
ducer. Capital, however capital may be de- 
fined, would practically cease to exist as an 
income producing fund, for the simple reason 
that if money, wherewith to buy capital, 
could be obtained for one-half of one per cent, 
capital itself could command no higher price. 

If the laws restricting the issue of currency 
were done away with, such a state of affairs 
would easily be brought about by voluntary 
associations. 

Banks could and would be established, not, 
as now, by a handful of stockholders for their 
own profit, but by associations of business 
men for their convenience and advantage. 



82 ECONOMICS OF LIBERTY 

These men would pledge their assets to sup- 
port the credit of the bank, and would accept 
the current notes of the bank in exchange for 
their own notes, paying only the trifling per- 
centage required to defray the cost of carrying 
on the bank. 

Anybody outside the association could ob- 
tain a loan by pledging his possessions to the 
amount of the loan, plus an allowance for 
deterioration, according to the nature of the 
commodity pledged, plus an allowance for risk. 

The notes of the bank would be redeemable, 
not in gold, but in any valuable commodity. 
Gold would no longer be the basis of the cir- 
culating paper currency; but all commodities 
would be available as a basis, that is, as se- 
curity. 

Thus, financial crises would be impossible. 

At present, financial crises occur, chiefly be- 
cause the paper currency is redeemable in gold 
only. There is never enough gold to redeem 
all the currency in circulation. Accordingly, 
when the supply of gold runs short, the secur- 
ity behind the notes is diminished, the loaning 
of notes is restricted or suspended, and the 
panic follows. 

Paper currency has hitherto been regarded 
with suspicion, as insecure. Whenever any 
measures are proposed looking toward the re- 
lief of the people by increasing the volume 
of the present governmentally controlled cur- 
rency, the newspapers enlarge upon the dan- 
gers of an inflated paper currency. 



THE MONEY PRIVILEGE 83 

And with justice, as long as the redemption 
of the currency is possible with only a single 
commodity — gold. 

But it is only under this condition that a 
paper currency is insecure. When not only 
gold but all commodities are available for the 
redemption of the paper currency, its volume 
is limited only by the value of all the wealth 
of the country, and it can never become in- 
secure up to this limit. 

There is another purpose served by gold 
under our present arrangements, in addition 
to its service as a basis or security, that is as 
a measure of value. 

Referring again to Table I, at the back, it is 
evident that any one of the products therein 
mentioned might be used as a measure of the 
proportions or values of the others. In our 
discussions we have used the bushel of grain, 
but any other might have been used. If gold 
had been listed among our typical products, 
gold also might have been used. 

Just which commodity shall be so used, de- 
pends chiefly upon its comparative invaria- 
bility in value. Hitherto gold has been used, 
ostensibly upon the ground that it varied less 
in value than any other commodity, although 
really, age-long custom has had a powerful 
influence upon the choice of gold. 

There appears to be much doubt whether 
the value of gold is as invariable as it has been 
supposed to be. Jevons, a most conservative 
economist, asserts that wheat is more stable 



84 ECONOMICS OF LIBERTY 

in value than gold; and, in recent years, the 
great increase in the cost of commodities gen- 
erally has been plausibly interpreted as really 
a decline in the value of gold, owing to an 
enormously increased production. 

Whatever commodity might be used as a 
measure of value, or as a unit of price, a 
phrase that seems preferable, it is evident that 
it could not be absolutely invariable. Some 
fluctuations must occur, however small. Nev- 
ertheless, although an invariable standard is 
unattainable, some standard is absolutely in- 
dispensable. 

What the standard will be under free condi- 
tions it is impossible to predict. Experiment 
and experience are needed to decide the mat- 
ter. It is not impossible that more than one 
standard or measure may be used ; a statement 
that seems an absurdity on the face of it; yet 
the desirability and feasibility of a multiple 
standard, even under present conditions, is 
warmly defended by the well-known economist, 
Irving Fisher. 

If such a multiple standard is feasible now, 
it would become much more so under free con- 
ditions, when speculative fluctuations would 
be largely eliminated, and all values would 
tend toward a stable and normal relation. 



All business men will realize the impetus to 
exchange, and indirectly to production, that 
such a change in the money system would 
give. 



THE MONEY PRIVILEGE 85 

The possibility of obtaining credit upon con- 
vertible assets of any kind will almost put an 
end to bankruptcy. For the reason that in 
most cases of bankruptcy, there are abundant 
assets to cover all claims, and the bankruptcy 
is, so to speak, merely fictitious, brought about 
by the impossibility of obtaining currency or 
credit. 

Credit would become much more stable. 
The retailer, instead of giving his time note 
to the wholesaler, would give it to his local 
bank, which would be perfectly acquainted 
with his standing and solvency, and he would 
receive the bank's current notes in exchange 
for it, with which to pay the wholesaler. In 
the end, the use of time notes between indi- 
viduals would be superseded by the use of 
currency for all exchanges; and time notes 
would be used only between the individual and 
the bank. 

The dangers of an inflated paper currency, 
upon which arguments against such an exten- 
sion of the credit system are often founded, 
are real enough when the only basis for re- 
demption is gold; because, with the relative 
diminution of the stock of gold, the paper cur- 
rency becomes less redeemable. 

But when the currency is redeemable, not in 
gold alone, but in all kinds of products, the 
variation in the stock of gold can have no ef- 
fect upon it. 

Production, too, would be incredibly in- 
creased. Free land is of little avail to him who 



86 ECONOMICS OF LIBERTY 

has not implements wherewith to work, nor 
subsistence until his product can be produced 
and sold. 

With money available at the cost of its pro- 
duction, a man who had even no assets, but of 
good reputation, could get endorsements that 
would enable him to obtain currency where- 
with to make a start, upon the strength of his 
future prospects, just as now the farmer ob- 
tains money or credit upon the strength of his 
yet unharvested crop. 

Nor need there be any fear of a destructive 
convulsion to trade caused by the introduction 
of free money. 

A convulsion would undoubtedly occur, if 
the change were sudden and general. But 
with the gradual establishment of free banks, 
each one compelled to maintain its credit in 
order to do business at all, no convulsion could 
occur. 

Gradually such free banks would associate, 
in order to support each other's credit, and, 
in the end, they would displace the present 
banks and inaugurate the new system, without 
any serious disturbance. 

Nothing prevents the establishment of free 
banks but the governmental restrictions al- 
ready recounted. There is little prospect that 
these restrictions will be relaxed, because in 
all nations, the bankers are the real power be- 
hind the government, and compel the main- 
tenance of the restrictions that give them their 
devouring monopoly. 



THE MONEY PRIVILEGE 87 

Such partial experiments as have been pos- 
sible in the past, have proved abundantly suc- 
cessful. 

The Massachusetts Land Bank, during 
Colonial times, prospered, and brought pros- 
perity to the community, until it was forcibly 
suppressed by special act of Parliament. 

The People's Bank, founded by Proudhon 
in the latter days of the French Revolution, 
flourished and grew, until it was forcibly sup- 
pressed by Bonaparte. 



TAXATION 

n^HIRD in our entirheration, although primary 
in its nature, among the methods of obtain- 
ing a portion of the products of the community, 
without taking part in production, the oldest 
and simplest is taking what is desired by force. 

This, when done by the upper classes, is 
called taxation. 

In the monarchical military organizations of 
the past, the character of this privilege is 
easily seen. The tax was levied in the name 
of the king or war leader, to whom the natural 
subservience of human nature spontaneously 
rendered submission. 

It was the king's army, the king's people, 
the king's taxes; and he who questioned the 
propriety of the royal prerogative of taking 
from his people without return or accounting, 
was reckoned, and felt himself to be, a crim- 
inal, guilty of the highest crime of disloyalty. 

Such is still the attitude of the generality. 
To evade the customs tax, to "swear off" the 
income tax, is still felt by most people to be 
the immoral avoidance of a just claim, even 
though they permit themselves to be guilty of 
these delinquencies. 

Although the form of society has been much 
modified, the industrial having begun to sup- 
plant the military, the nature of taxation re- 
mains the same. It is still the taking of other 
people's possessions without their agreement, 

(88) 



TAXATION 89 

even if with their tacit consent ; that is to say, 
no opportunity is offered by which the pay- 
ment may be withheld, on the ground that the 
services offered in return are not worth the 
amount demanded, or are not wanted at all, 
as would be done in ordinary mercantile trans- 
actions. 

It is often said by reformers that govern- 
ment should be conducted upon business prin- 
ciples. This is impossible, because business 
rests upon doing its work well in return for 
what is freely given in payment ; whereas gov- 
ernment demands and takes its income, 
whether its work is well done or not, and 
whether it is wanted or not. 

The distinction is ineffaceable. 

The officials of a governmental organization, 
whether autocratic, constitutional or demo- 
cratic, are in the position of those of a corpora- 
tion of which the chief expenses are the sal- 
aries of the officials and employees, and the 
income is obtained by forcible levies. 

It is impossible that an income so obtained 
should be expended as carefully and economic- 
ally, and as much in the interest of those who 
pay it, as if it had to be obtained by offering 
a fair equivalent to taxpayers, and convincing 
them that the proposed bargain was to their 
advantage, leaving them free to accept or de- 
cline at their pleasure. 

For this reason denunciation of govern- 
mental corruption is entirely futile, indeed, 



90 ECONOMICS OF LIBERTY 

laughable to them who have once clearly com- 
prehended the true state of affairs. 

The functions fulfilled by government today 
are chiefly of a commercial character, yet the 
service given is remunerated, not by bargain 
and sale, but by forcible levy. It is inevitable 
that officials should use this force-collected 
income to secure their own continuance in 
office by conferring valuable privileges upon 
their supporters, who, in turn, use every effort 
to strengthen the government. 

The fact of this co-operation is well known. 
Everybody knows that behind each political 
party stands a group of rich men, and that 
their influence over the votes which are to 
elect the officials is given in return for the 
continuance of the privileges by which their 
wealth has been created. 

This power of taking money from the indi- 
vidual without his consent, is the fundamental 
privilege upon which all the others are based, 
and by which they are licensed. It stands 
upon no logical ground, but is the royal pre- 
rogative — the will of the prince — in the lan- 
guage of former days. 

It will perhaps be thought that a tax im- 
posed by a representative assembly loses the 
character of a forcible levy, and becomes prac- 
tically a mercantile transaction. Brief con- 
sideration will show that this is not the case. 
Although the severity of taxation by an auto- 
crat is much mitigated by constitutionalism, 
the principle remains the same. Taxes are no 



TAXATION 91 

longer imposed by leasing the collection to a 
pacha or proconsul, and letting him plunder 
unchecked. Modern governments have learned 
the importance of keeping the goose in good 
health, that it may lay more golden eggs. 

But the vote is useless against taxation. 
Whichever party wins, taxes go on, and must 
go on. It is not possible to vote for a repre- 
sentative who will oppose taxation, for it is 
from taxation that he gets his bread and 
butter. 

The essence of economic exchange is the 
freedom of both parties to withhold consent 
to a bargain. Even if it could be shown that 
the equivalent given were fully equal to the 
assessment levied, it would still lack the free- 
dom of choice of the individual to permit it to 
be ranked as a commercial transaction. 

The total amount of taxation in the United 
States, including Federal, State, city, town, 
village, school and all other taxes, has been 
calculated at something like $2,500,000,000. 
With a population of about 100,000,000 this 
amounts to about $25 per head, or $125 per 
family. 

Great as is this forced deduction from the 
products of the workers, the damage inflicted 
by taxation indirectly is still greater. First 
must be placed that caused by taxes upon im- 
ports. These restrict freedom of exchange in 
two ways ; by limiting or preventing trade be- 
tween the nations which impose them, and by 
fostering monopolies among producers. 



92 ECONOMICS OF LIBERTY 

When nations give up the last remnants of 
the military state of the past and become fully 
commercialized, these tariffs will be abolished, 
and production and exchange incalculably 
stimulated. 



SPECIAL PRIVILEGES 

HTAXATION, Land ownership, Money re- 
striction — these we have described as the 
general tools by which products are taken from 
the producer by the privileged. 

Besides these, there are special privileges 
granted to favored supporters by the clique 
of politicians called government, that, for the 
time being, holds the power of taxation. First 
among these is the tariff on imports, to which 
we have alluded. 

Although primarily a form of taxation, a 
tax upon imported goods is incidentally a spe- 
cial benefit to certain individuals, and is often 
raised, for their advantage, to a point above 
that which would afford the largest revenue to 
the tax collecting power. 

There is a certain point beyond which the 
rate of a tariff cannot be raised, without caus- 
ing a diminution in imports more than suffi- 
cient to counteract the increased rate. So that 
the point of maximum revenue is not the high- 
est rate, but at some point below that, at which 
the amount of imports multiplied by the rate 
of the tax gives the maximum product. 

When a tariff is raised beyond this point, 
in addition to its character as a tax, it assumes 
another aspect as a special privilege, permit- 
ting the producers of the commodity that is 
taxed to charge a higher price than could be 

(93) 



94 ECONOMICS OF LIBERTY 

obtained if foreign goods were to be had in 
competition with it. 

Another form of special privilege is that con- 
ferred by patents and copyrights. 

As in the case of the land privilege, the ef- 
fects of this are not, at first, conspicuous. 
Just as, at first, while population is sparse and 
all land is cheap, the power of the landlord is 
not felt, so, at first, the profits to the inventor 
or author seem wholly beneficent. 

Later experience shows that the advantages 
to the inventor or author are usually small, 
but that to the holder of important patents, 
the privilege becomes the basis of excessive 
monopoly charges, as in the case of the tele- 
phone patents; while the copyright becomes 
the foundation of wealthy publishing houses, 
giving comparatively little advantage to 
author. 

It is observed, too, that it is always the 
people who control the money wherewith an 
invention or a book is produced, who reap the 
great profit. Except in the case of novels of 
large sale, or of inventions of wide utility, and 
where the inventor or author unites the 
shrewdness of a money-maker with the genius 
of a creator — a rare combination — the money 
gain to the originator is seldom more than a 
fraction of the profit that the moneyed pur- 
chaser of the privilege is able to win. 

Less extensive in profit producing power, 
but falling in the same class of privileges 
granted to a favored few, is the whole system 



SPECIAL PRIVILEGES 95 

of licenses and permits for the exercise of in- 
dustry, from the street peddler's permit, for 
which he must pay five dollars, to the doctor's 
and lawyer's diplomas, ostensibly intended to 
exclude the incompetent, but really to limit 
the number and uphold the fees, of the profes- 
sions. 

These rank among the minor privileges, but 
there is one form of special privilege which 
will compare in magnitude with the greater 
general privileges — the public franchises that 
are granted to all sorts of concerns. 

Often these are united with the land own- 
ing privilege in some form, as in the case of 
the franchises granted to railroads, which in- 
clude a title to the land covered by the right 
of way; but, in some cases, the franchise in- 
cludes no such title, as in the case of city rail- 
roads, or elevated or underground lines, which 
are merely special privileges to run vehicles 
on certain streets. 

So large, however, have become the in- 
terests of these railroads, and other franchise 
holding companies, that in political influence 
they stand alongside the holders of the money 
privilege and the beneficiaries of the tariff. 

Special privileges are so clearly artificial 
that no argument is needed to prove the fact; 
while general privileges, because they are gen- 
eral, and are supposed to apply to all members 
of the community, conceal their character as 
privileges, and an entirely new standpoint and 



96 ECONOMICS OF LIBERTY 

a complete revision of preconceived ideas are 
required to penetrate their true nature. 

Hence also, at periods of popular question- 
ing, as at present, it is always the special 
privileges that are the first objects of attack. 
Down with the monopolists! is the cry; but 
only the specially favored are meant; while 
the general privileges beneath — Taxation, 
Rent, and Interest — are permitted to pass in 
peace. 

It is hard to arrive at the exact amount 
taken by privilege : some rough approximation 
may be made. 

The total taxation in the United States is 
placed, as has been stated, at about $2,500,000,- 
000. 

The interest on securities Wall Street places 
at about $1,000,000,000 annually. All other in- 
terests — on mortgages upon improvements, 
on notes, and the rent that is paid for build- 
ings and other improvements — will be under 
the mark if we take it at twice that amount, 
say $2,000,000,000. 

Ground rent proper, and interest upon mort- 
gages upon land cannot be much less. 

Thus we have: 

Taxation $2,500,000,000. 

Interest 3,000,000,000. 

Rent 2,000,000,000. 

Total $7,500,000,000. 



SPECIAL PRIVILEGES 97 

Which, with a population of about 100,000,- 
000, makes $75 per head, for each man, woman 
and baby ; or, taking an average family at five 
persons, $375 per family. And this where the 
average income per family is less than $600. 



LIBERTY 

'\A^E have seen that privilege, in its various 
forms, is the engine by which industry is 
deprived of a large part of its product; and 
that, in order to permit the producer to retain 
his v^^hole product, it is necessary that privilege 
should be abolished. 

When privilege is abolished, and the worker 
retains all that he produces, then will come the 
powerful trend toward equality of material 
revv^ard for labor that will produce substantial 
financial and social equality, instead of the 
mere political equality that now exists. 

To bring about equality, it is unnecessary to 
use any artificial means for the distribution of 
products : it is only necessary to give free play 
to the natural forces that govern production 
and exchange. 

And with equality will come fraternity: no 
longer the rich trampling on the poor; no 
longer prosperity for one, only at the price of 
impoverishment for the other; no longer the 
petty social strife for precedence. 

Distinction and honor will be awarded to 
personal merit; as, even now, we honor an 
Agassiz, a Darwin, a Tolstoi and a Curie — 
names that will survive when all the famous 
financiers of the day are forgotten, or pilloried 
with those of buccaneers and assassins. 

When the fathers of the American Republic 
had abolished titles of nobility, with primo- 

(98) 



LIBERTY 99 

geniture and entail, by which the land was 
given to the few; when they had established 
the rule of the majority and representative as- 
semblies ; they thought that they had abolished 
privilege. 

The event shows that they had not. Democ- 
racy has had its day; and has proved its total 
inability to abolish or even to control privilege. 
On the contrary, in this democratic country, 
privilege grows and overruns all limits, grasp- 
ing everything in sight, ignoring all claims of 
reason and humanity, far beyond anything it 
has attempted under the old monarchical sys- 
tems of Europe. 

Behind each political party stands a group 
of rich men, who have been made rich by privi- 
lege, which secretly controls all political ac- 
tion. The great land owners — the railroads, 
and mining companies and oil companies — and, 
still more, the banking clique, which holds the 
money privilege, joined with the great manu- 
facturers — the steel mills and woolen mills and 
cotton mills— which fatten on the tariff — all 
these have their representatives in every State 
legislature and in the Federal Congress, who 
see to it that no legislation is enacted hostile 
to their interests and privileges. 

Without the permission of these men, not a 
candidate for office, from village constable to 
President, can be nominated, let alone elected. 
And if, by chance, a Liberal or Socialistic can- 
didate slips past, he finds himself able to ac- 
complish only petty reforms; he dares not. 



100 ECONOMICS OF LIBERTY 

even if he were able, to strike at the founda- 
tions of privilege. 

We boast that the majority can control, if it 
choose, through the ballot. Practically this 
is impossible. No man can give the time that 
is necessary to acquaint himself with the 
merits of the innumerable candidates, and 
have time left for carrying on his daily busi- 
ness. Often, too, it happens that the candidate 
of neither party is satisfactory, when voting 
for either becomes a farce. 

Besides this, representative government is 
an impossibility in itself. No one man can 
represent another; still less can he represent 
a constituency of hundreds or thousands. He 
cannot know their collective interests, still less 
their individual interests. The result is that 
he devotes himself to what he does know — 
his own interests. 

Thus the political control falls into the hands 
of men who make it their sole business — men 
who either hold office or hope to hold office or 
expect, in some indirect way, to profit by the 
results of elections. Some of these develop 
into political leaders or "bosses", who are in 
touch with the rich clique behind the scenes, 
that puts up the money needed for mass meet- 
ings, processions, campaign literature and all 
the legitimate expenses of an election, as well 
as the illegitimate expenses, terminating in 
direct bribery of both voters and of elected 
officials and representatives. 



LIBERTY 101 

All attempts to establish a collectivist Social- 
istic scheme of society by governmental 
methods, are predestined to failure: they are 
sure to become mired in the slough of 
politics. 

For the same reason, all the palliatives that 
from time to time are advanced — minority 
representation, direct primaries, the referen- 
dum, the initiative and the recall — all are nuga- 
tory, and can give no permanent relief. People 
cannot devote the necessary time to public 
affairs, if they are to attend properly to their 
private affairs. 

We are urged to be "good citizens," to take 
part in ward primaries, to vote at elections. 
It is impossible. Even at the elections of 
private clubs, as long as all runs smoothly, 
hardly one in ten of the members votes. If 
the management is not satisfactory, resigna- 
tions pour in. But from the governmental 
club there is no possibility of resigning: we 
are forced to pay our dues, whether we like 
it or not. 

Apart from such comparatively petty prac- 
tical difficulties, the fundamental theoretical 
difficulty remains, that government, in all its 
forms, is based upon privilege — ^the privilege 
of taxation — and therefore cannot abolish 
privilege. 

Even if we grant that all reforms are ac- 
complished, that government has successfully 
overthrown the land privilege and the money 
privilege, we shall find that, in overthrowing 



102 ECONOMICS OF LIBERTY 

these, we have but fortified the governmental 
privilege. 

No governmental system of currency reform 
has ever been proposed that did not involve 
the monopoly of money by the government 
itself. 

No scheme of land reform, not even the 
single tax proposition, can be carried out, with- 
out some plan for seizing abandoned land and 
again renting it ; which means that government 
would become the supreme landlord. 

Privilege can never overthrow privilege. 



We are compelled, therefore, to discard all 
governmental, that is to say, compulsory, 
modes of organization, in our search for some 
way of abolishing privilege. 

Privilege, by its very nature, means restric- 
tion. A privilege to do certain things cannot 
be granted to one, without prohibiting or re- 
stricting others from doing the same thing. 
What we seek to do away with, therefore, is 
not privilege directly, but the restriction upon 
action of some, that results in privilege to 
others. 

You cannot grant to one man the privilege 
of holding land out of use, without prohibit- 
ing others from using the land so held. You 
cannot grant to one man the privilege of offer- 
ing current promissory notes, without pro- 
hibiting others from a similar act. 



LIBERTY 103 

We are in search, then, of a system of social 
organization that shall prevent any one from 
restricting the acts of others; that shall insure 
to all freedom of individual action and freedom 
of contract with others, so that nothing shall 
be prohibited between individuals to which 
both parties consent. 

Such freedom of action is what we mean 
when we speak of personal liberty ; and in seek- 
ing a social organization that shall insure free- 
dom of action, v/e seek for one that will uphold 
liberty. 

Some form of social organization to defend 
liberty seems to be essential; otherwise the 
liberty of each individual would be at the 
mercy of any one stronger than he, or of any 
group of two or more who might unite to in- 
vade his liberty. 

Moreover it is impossible for a man living 
with others to enjoy such absolute liberty as he 
might exercise, if he were the sole inhabitant 
of the world : he must make some concessions 
to harmonize his actions with those of others. 
Evidently the liberty that is to be defended is 
not the liberty to kill or rob. 

What, then, are the limits of liberty in 
social life? What actions are to be permitted, 
and what prohibited? How can we prohibit 
anything, without thereby erecting privilege? 

All actions may be classified under two 
heads, as non-invasive and invasive actions. 
Invasive actions are such as restrict liberty of 
action on the part of others : noninvasive 



104 ECONOMICS OF LIBERTY 

actions are those which accomplish no such 
restriction. 

To kill a man is to invade his liberty of ac- 
tion, as it completely cuts him off from the 
possibility of any action. To rob him invades 
his liberty, as it deprives him of the power of 
doing what he wants to do with his product. 
The robbery and murder on a grand scale, that 
are done by privilege, are equally invasive of 
liberty. 

Privilege, indeed, is invasive action. 

Evidently the actions to be prohibited are 
the invasive actions ; and the actions to be per- 
mitted and defended are the noninvasive 
actions. 

Complete individual liberty in social life 
means liberty to do anything that is not inva- 
sive of the liberty of others. 

As phrased by Herbert Spencer, in Social 
Statics, liberty means "that each shall do 
whatever it may please him to do, provided he 
infringes not the equal liberty of others." 



The social organization of the future, then, 
will be an organization to defend liberty. 

It must begin by offering its services, not 
by imposing them. The funds for its support 
it must obtain, not by taxation, but by volun- 
tary subscription. It must offer to defend your 
liberty if you choose to pay for it ; not compel 
you to be defended, whether you want to or 
not. 



LIBERTY 105 

One case where this was done under present 
conditions happened to come under my obser- 
vation. A small suburban settlement, too small 
to have even a village government, was ex- 
posed to the frequent depredations of burglars. 
An enterprising member established a private 
police force, and offered to protect houses from 
burglars for a moderate charge. Many sub- 
scribed, and their houses were carefully 
watched, while nonsubscribers took their 
chances. It is needless to say that if a burg- 
lary had occurred in one of the subscribers' 
houses, the subscriptions would have fallen off 
rapidly. 

Under such a system, you pay for what you 
get, and you get what you pay for; or, if you 
don't get it, you don't pay for it. 

Objections innumerable may be urged by 
people who are incapable of grasping broad 
principles. Demands for a clear description of 
the future society in all its details, with in- 
formation as to how it is to be brought about, 
will be made by others. 

It is impossible to prophesy the future in 
particulars; still more impossible to foretell 
just how the change will come about ; but there 
seems to be no serious reason why such a 
voluntary system should not be extended to all 
public affairs. 

Courts would become arbitrators, with no 
power to enforce their decrees, save when the 
local Liberty Defence League might be called 
upon. 



106 ECONOMICS OF LIBERTY 

Roads could be maintained by road building 
societies, local and general. Lighthouses by 
boards of trade and ship owners' societies. 

Railroads, in the absence of dividends, would 
be in the hands of only such stockholders as 
had some personal interest in their manage- 
ment; or would revert entirely to the em- 
ployees organized to carry them on. 

Freedom of land for use would be asserted 
and maintained and freedom in the issuing of 
currency as well. 

With the incubus of Privilege removed, pro- 
ducers would retain all their product. Wealth 
and poverty, and the ignorance and crime that 
poverty begets, would disappear. A new world 
would dawn upon us, where industry and com- 
fort would be for all, and where joy and glad- 
ness would take the place of care and misery. 

Just how this is to come about, no one can 
tell. Possibly thinking people, seeing the ad- 
vantages, may increase in numbers sufficiently 
to refuse to pay rent and taxes, and to force 
from government the liberty to organize a free 
banking system. 

More probably things will go on as they are, 
until a crash comes. The present system, 
pushed to its extreme, will fall in ruin. Hun- 
dreds of thousands of impoverished wretches 
V7ill besiege the soup houses, and beg for 
shelter in the churches. Business will be pros- 
trate. Banks will fail by the hundreds. Stocks 
will pay infinitesimal dividends. Bonds will 
fail to yield interest. The "reptile press", as 



LIBERTY 107 

John Swinton used to call it, will attribute 
everything to ''lack of confidence". 

Then a few of those who know will establish 
banks, which the government will be powerless 
to prohibit. Land, fallen into worthlessness as 
a rent producing power, will lie open for use. 
Gradually the new society will build itself up, 
upon the pile of carcasses left by the expiring 
civilization. 

In whatever way it may come, may it come 
quickly. 



APPENDIX I. 

The equalization in the exchange of products, 
which is represented as resulting from the 
chaffering of two individuals, is, in a developed 
society, accomplished by competition. 

This word "competition" is a scarecrow to 
many who see clearly enough that the only 
solution to the industrial problem lies in the 
retention by the producer of his whole prod- 
uct; but who deem it necessary, in order to 
reach that end, that some superior power 
should control all sources of production, and 
deal out the products to the workers in some 
fixed proportion. These are called "coUectiv- 
ists" ; and they think that it is possible to form 
such an organization, which shall be free from 
the defects inherent in government. 

It is not surprising that they shy at the word 
"competition", for by "competition" they 
picture to themselves nothing but the present 
ghastly struggle of worker against worker, to 
avoid being pushed into the abyss. 

At present, not only the nonproducing classes 
are held by privilege as its servitors, receiving 
what pay privilege chooses to grant, but all 
who work for wages are reduced to the same 
condition. They receive from privilege, not 
their whole product, but a mere fraction of it, 
so that the term "wage slaves" is not a rhetor- 
ical embellishment, but a precise statement of 
an economic fact. 

(108) 



APPENDIX I 109 

When privilege finds it impossible to sell its 
product, because the producers, who should be 
also the purchasers, are without the means 
wherewith to buy, instead of raising their pay 
to give them power to buy and thus extend the 
market, privilege cuts down their pay still 
lower and restricts production to suit the di- 
minished sales. 

Worse than all, privilege casts out thousands 
of workers to rot on the street — ^workers who 
would be both producers and consumers if they 
were permitted by privilege. 

It is to avoid this hell of being out of work 
that causes the present scramble of so-called 
competition. It is competition to be permitted 
to work ; and no one who has experienced the 
frightful sensation of not being able to find 
employment will think "hell" too strong to 
describe it. 

Men who are out of work are desperate, and 
will work for a bare pittance to avoid starva- 
tion, excepting always an intelligent minority, 
who refuse to work for almost nothing, and 
deliberately embrace a life of idleness and beg- 
gary, whom privilege stigmatizes as "profes- 
sional tramps." 

The others, who are also out of work, but 
who will work for a minimum, privilege highly 
esteems as a means of reducing still further by 
their competition the amount that it must pay 
its slaves. Privilege regards "the army of the 
unemployed" as a providential provision to 
keep down what privilege calls the cost of 



110 ECONOMICS OF LIBERTY 

labor; and willingly doles out small charities 
to keep them from total starvation. 

Among the employers and mercantile clas- 
ses competition is the same cutthroat struggle 
to be permitted to work. The storekeeper or 
manufacturer who cannot obtain money or 
credit from the bank, because he cannot pay 
the amount demanded by privilege, is forced 
into bankruptcy, forced to close up his business 
and begin life anew; perhaps forced into the 
ranks of the wage workers, if indeed he is not 
left quite stranded and hopeless among the 
unemployed. 

Little wonder that the mere word "com- 
petition" arouses shuddering terror and angry 
protest ! 

The competition that determines exchange 
prices in a state of freedom is an entirely dif- 
ferent matter. It is not a mad stampede to 
escape destruction but the rational effort of 
men who are already well provided for to im- 
prove their condition. 

By the opening up of the sources of pro- 
duction, and by the freeing of exchange from 
the shackles in which it is now held, there will 
result abundant employment for everybody. 
The army of the unemployed will vanish. 
There will be more work to be done than there 
are men to do it. Nobody will lack work nor 
fear starvation. 

When everybody is employed, and each is 
able to dictate the terms of his employment, 
because work vAll be crying for men, not men 



APPENDIX I 111 

for work, although the word "competition" re- 
mains the same, the condition that it denotes 
will be completely changed. It is a pity that 
some other word could not be invented to de- 
scribe it. 

It will be a struggle, not of man against man 
to get employment, but of each to find the sort 
of work for which he is best suited, sure, mean- 
while, of a good living, even though the work 
that he is doing does not quite suit him. 

The struggle will be, not to produce the poor- 
est possible work, in order to lower the price 
and force a sale, but to do the best work pos- 
sible, at a price which tends continually toward 
a normal fixed price, notwithstanding small 
fluctuations. 

The struggle will be for the men and the 
land to adapt themselves to each other, so that 
the varying qualities of land and the varying 
qualities of men will become fitted together to 
produce various products in greatest abund- 
ance. 

Thus competition, in its new sense, becomes 
the most perfect spontaneous cooperation ; not 
the quasi-military cooperation of compulsion, 
but the natural cooperation of free choice, for 
a reward equal to the whole product, deter- 
mined by the inevitable working of economic 
relations. 

By competition, in this quite different sense, 
the price is spontaneously reduced to the cost 
of production, the cost being the expense for 
material, overhead charges and all other ex- 



112 ECONOMICS OF LIBERTY 

penses, plus the wages, in the economic sens^ 
of the producer, which continucdly tend t 
equality. 

Such competition as this, where the p: 
ducer is not in continual peril of his life, whc 
life is secure anyway, and the desire to exc 
is the only stimulus, is the economic equivalt 
of that spirit of emulation toward which o 
lectivists have pointed as their ideal. 



APPENDIX II. 

Economic rent is said to be inherent in the 
advantage obtained by the producer who oc- 
cupies a superior site — superior in fertility, 
accessibility or otherwise. 

It is admitted that the market price is fixed 
by the cost of production under the most ad- 
verse circumstances. Thus a farmer whose 
farm was ten miles distant from the market 
would have to add the cost of transportation 
for ten miles to the price of his product. One 
whose farm was only one mile distant would 
have a proportionally less amount to pay for 
transportation; but he could obtain the same 
price as the more distant one. The additional 
amount above the cost thus obtained by the 
occupant of the nearer site is held to be the 
economic rent. 

This is the celebrated Ricardian theory of 
rent; and, at first sight, it appears to be irre- 
futable. 

I am strongly inclined to think that the 
theory is erroneous; that it is, in homely 
phrase, putting the cart before the horse. 

It is commonly said that the most valuable 
land brings the highest rent, that less valuable 
land brings less rent, that the amount of rent 
that can be obtained is in direct proportion to 
the value of the land, and immediately results 
from it. Ordinarily no one would dispute this 
proposition. 

(113) 



114 ECONOMICS OF LIBERTY 

An opposite view, however, may be taken. 
Instead of saying that the most valuable land 
brings the most rent because it is the most 
valuable, we may turn it about and say that 
the most valuable land is the most valuable 
because it brings the most rent. This seems 
to be the same thing : it is really quite different. 

In carrying on their various works of pro- 
duction, men do not all want the same piece of 
land, nor even similar pieces. The farmer 
would have no use for a city lot for productive 
purposes at all. Under the present system he 
could indeed by his power of monopolistic 
holding obtain a price from somebody who 
could use it; but, without this power, such a 
lot would be quite useless to him for produc- 
tive purposes. 

On the other hand, his farm of forty acres 
would be equally useless to a professional man, 
say a physician. And neither the farm nor the 
lot would be of any use to a deep sea fisher- 
man. 

People require different quantities of land 
and different localities, according to the char- 
acter of the industry in which they engage. 
For some mere desk room in an office is all 
that they need: for others, many acres are 
necessary. But the desk-room man can do 
nothing with the acres; while the acres man 
would be just as much at a loss to carry on his 
business with only desk room. 

Now the monopoly of all land makes it pos- 
sible for the holders of land to demand a cer- 



APPENDIX II 115 

tain average amount from all who work on the 
land, that is, from everybody, whether the par- 
ticular land each one needs be much or little. 

And this appears to be the reason why city 
land is commonly reckoned to be more valu- 
able than land in the country. City workers 
do not need much land in their pursuits — would 
not be able to use it if they had it. But mon- 
opoly takes an average equal share from each, 
and the rent of a grocer store on a twenty-five 
by a hundred foot lot may equal or exceed that 
for a large farm. 

So that land of small area, upon which many 
people can work, permits the exaction of a 
higher rent by monopoly, and is therefore ac- 
counted more valuable. 

When the elevator, and its offspring, the tall 
office building, were invented, permitting 
workers to be piled up twenty stories high, in- 
stead of five as before, the amount of rent that 
could be extracted from each of them remained 
the same, but the amount that could be ob- 
tained per square foot of ground was propor- 
tionally increased, and the land became by just 
so much more valuable. 

A mine is more valuable than the fields 
about it, because hundreds of workers can pro- 
duce in a limited area. From each one rent is 
exacted, not directly, it is true, but by the re- 
duction in wages that miners suffer. 

In a state of freedom, when land ceased to *^ 
be monopolized, all this would cease. The 
producer would use as much or as little land 



116 ECONOMICS OF LIBERTY 

as might be required by his vocation ; and land 
would no longer have any value, because no 
rent could be deducted from the product of 
the workers. 

It is necessary for the production of all the 
varied products of civilization, that there 
should be different kinds of land, some arable, 
some mineral, some waterpowers, some towns 
and villages. For each variety of each differ- 
ent kind of product, minor differences in land 
are needed; and, in the end, by a continual 
process of adjustment, each piece of land would 
be used for the purpose for which it was best 
fitted. 

Differences in the natural qualities of land 
bear a close analogy to differences in the 
natural ability of persons. So far from being 
a cause of inequality in income, such differ- 
ences, whether in the land or the individual, 
are essential for equality. An equality not 
doled out as an equal wage by a quasi-military 
government, but a powerful tendency to sub- 
stantial natural equality, as the sea tends to 
a level surface, in spite of the waves that con- 
tinually vary temporarily its placidity. 



# 



> 








♦ 








' 




VIII. 


k 


of Each 


Price of Total 
Product 




VI. 


III. multiplied by V. 


j 


.00 =$39 


00 


3900 bu. =$3900.00 




.33= 13 


00 


156 cows = 1300.00 




.00= 9 


00 


18 houses = 900.00 




.00= 8. 


00 


160 suits = 800.00 




.66= 12 


00 


180 tools = 1200.00 




.33= 3 


00 


90 books = 300.00 




.50= 14 


00 


2800 miles = 1400.00 




.66= 2 
$100 


00 
.00 


12 open = 200.00 




Total, $10000.00 




.00= $1 


.00 


1 diam. = $100.00 




2.50 =$4 


00 


160 suits = $400.00 




5.00= 4 


.00 


801uxur. = 400.00 











TABLE I. 
Showing Exchange Relation in a Community of 100 Members. 



Occupation 



Annual Product 

of Each 

Individual 



Total Annual 
Product 



Share of Each 
Member of 
Commjjnity 



Exchangeability 

in Terms of 
Other Products 



Money 



Amount of Income of Each 
Member 



Price of Total 
Product 



I. multiplied by II, 



III. divided by 100 



II. dividedby 100 



IV. multiplied by VI. 



III. multiplied by V. 



39 farmers 

13 graziers 

9 carpenters 
8 tailors 
12 toolmakers 
3 printers 

14 carriers 
2 doctors 

100 members 



100 bu. grain 

12 cows 

2 houses 

20 suits 

15 tools 

30 books 

200 miles of 

transportation 
6 operations 



3900 bushels 
156 cows 

18 houses 
160 suits 
180 tools 

90 books 

2800 miles of 

transportation 
12 operations 



28 



9 . bushels 

1 . 56 cows 

. 18 house 

1 . 60 suits 

1 80 tools 

.90 book 

miles 

12 operation 



busiel 
12 cow 
.02 house 
20 suit 
15 too 
30 booi 
miUs 
.06 operation 



1 bushel 
1 cow 
1 house 
1 suit 
1 tool 
1 book 
1 mile 
1 operation 



$1.00 
8 33 

50 00 

5 00 

6.66 

3.33 

.50 



39. 



bushels ® $1 00 =$39.00 



1 56 cows @ 8 33 = 13 00 

18 house @ 50 00 = 9.00 

1 .60 suits @ 5 00 = 8.00 

1.80 tools @ 6.66= 12.00 

. 90 book @ 3 33 = 3 00 

28. miles @ 50= 14.00 

.12 operation @ 16 66= 2.00 

Total, $100 00 



3900 bu. =$3900.00 
156 cows = 1300 00 
18 houses = 900 00 
160 suits =: 800.00 
180 tools = 1200.00 
90 books = 300.00 
2800 miles - 1 4 00 00 
12 opcr. = 200.00 
Total, $10000 00 



SPECIAL INSTANCE (See Page 44) 


1 diamond seeker 


1 diamond 


1 diamond 


. 01 diamond 


. 01 diamond 


1 diamond 


= $100 00 


. 01 diamond 


@$100.00= $1 00 


1 diam. 


- $100.00 


SPECIAL INSTANCE (See page 47) 


4 tailors 
4 luxury producers 


40 suits 
20 luxuries 


160 suits 
80 luxuries 


1.60 suits 
. 80 luxury 


. 40 suit 
20 luxury 


1 suit 
1 luxury 


= $2.50 
5.00 


1 . 60 suits 
.80 luxury 


@ $2.50 =$4.00 
@ 5.00= 4.00 


160 suits 
80 luxur. 


- $400.00 

- 400 . 00 



f. 



i 

V 


:onstant 








ni. 


VIII, 


IX. 


f 


are of 

-ach 

>ducer 


Taken by 

Each 

Non-producer 


Ratio of Shares 

of Producer 

and Non-producer 




1 

.80 

.60 

.40 

= .20 

= 0. 




18 

— = 1 . 80 
10 

32 

— = 1.60 
20 

42 

— = 1 . 40 
30 

48 

— = 1.20 
40 

50 

— = 1.00 
50 


1 to 
1 to 2.25 

1 to 2 . 66 

1 to 3 . 50 

1 to 6 . 99 

1 to infinity 











TABLE II. 
Showing the Division of Products 

■when privilege takes an increasing portion while the individual product remains constant 





I. 


II. 


III. 


IV. 


V. 


VI. 


VII. 


VIII. 


IX. 




Number of 
Producers 


Number of 
Non-producers 


Product of 

Each Producer 

Annually 


Total Annual 
Product 


Part Divided 

Among 

Producers 


Part Divided 

Among 
Non-producers 


Share of 

Each 
Producer 


Taken by 

Each 

Non-producer 


Ratio of Shares 

of Producer 

and Non-producer 


No part taken by priv- 
ilege 


100 





1 


100 


100 





1 





1 to 


10% non-producers 
20% of product 
taken 


90 


10 


1 


90 


80% of 90=72 


20%, of 90 = 18 


72 

— = 80 

90 


18 

— = 1 80 

10 


1 to 2.25 


20% non-producers 
40% of product 
taken 


80 


20 


1 


80 


60% of 80=48 


40% of 80=32 


48 

— = .60 

80 


32 

— = 1 60 

20 


1 to 2 66 


30% non-producers 
60% of product 
taken 


70 


30 


1 


70 


40% of 70=28 


60% of 70=42 


28 

— = .40 

70 


42 

— = 1 40 

30 


1 to 3 . 50 


40% non-producers 
80 % of product 
taken 


60 


40 


1 


60 


20% of 60 = 12 


80% of 60=48 


12 

— = .20 
60 


48 

— = 1.20 

40 


I to 6 . 99 


50% non-producers 
100% of product 
taken 


50 


50 


1 


50 


0% of 50= 


100% of 50=50 




— = 0. 
50 


50 

— = 1.00 

50 


1 to infinity 



TABLE III. 
Showing the Division of Products 

when privilege takes an increasing portion and when production increases rapidly 





I. 


II. 


III. 


IV. 


V. 


VI. 


VII. 


VIII. 


IX. 




Number of 
Producers 


Number of 
Non-producers 


Product of 

Each Producer 

Annually 


Total Annual 
Product 


Part Divided 

Among 

Producers 


Part Divided 

Among 
Non-producers 


Share of 

Each 
Producer 


Taken by 

Each 

Non-producer 


Ratio of Shares 

of Producer 

and Non-producer 


No part taken by 
privilege 


100 





1 


100 


100 





1 







1 to 


10% non-producers 
20% of product 
taken 


90 


10 


2 


180 


80% of 180 = 144 


20% of 180= 36 


144 

= 1 . 60 

90 


36 
10 


= 3.60 


1 to 2 25 


20% non-producers 
40% of product 
taken 


80 


20 


4 


320 


60% of 320=192 


40% of 320 = 128 


192 

= 2.40 

80 


128 
20 


= 6.40 


1 to 2.66 


30% non-producers 
60 % of product 
taken 


70 


30 


8 


560 


40% of 560=224 


60% of 560=336 


224 

= 3.20 

70 


336 
30 


= 11.20 


1 to 3 50 


40% non-producers 
80 % of product 
taken 


60 


40 


16 


960 


20% of 960 = 192 


80% of 960=768 


192 

= 3.20 

60 


768 
40 


= 19.20 


1 to 6 00 


50% non-producers 
100% of product 
taken 


50 


50 


32 


1600 


0% of 1600= 


100 %ofl600 = 1600 




— = 
50 


1600 
50 


= 32.00 


1 to infinity 



i 



